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The RP Data CoreLogic Home Value Index found that despite a slowdown in growth in September, values continued to rise, increasing by 2.2 per cent over the past three months.
Although combined capital city home values were up by 1.0 per cent over the month, only Sydney (1.3 per cent), Melbourne (1.9 per cent) and Brisbane (0.6 per cent) actually recorded value rises over the month.
According to RP Data research director Tim Lawless this result highlights weaker housing market conditions outside of Australia’s largest cities.
"Sydney, Melbourne, Brisbane and Adelaide were the only capital cities to record an increase in home values over the past three months,” Mr Lawless said.
“Sydney continues as a standout with home values increasing at a rate of more than 1.0 per cent a month, up 3.9 per cent over the past three months,” he said, adding that Perth and Canberra have clearly moved through the peak of their growth cycles.
The greatest value falls over the last three months were recorded in Hobart (-2.8 per cent) and Canberra (-2.4 per cent).
“Looking at the increase in home values over the 12 months to October, it is clear that the rate of capital growth is continuing to moderate,” Mr Lawless said.
“Despite the annual rate of value growth slowing, all capital cities have still recorded an increase in home values over the past year,” he said.
“Home values across the combined capital cities have increased by 8.9 per cent over the twelve months to October, which has slowed from a peak of 11.5 per cent in April of this year.”
Sydney, and to a lesser degree Melbourne, continued to be the main drivers of the increase in home values.
Over the past year, Sydney home values were 13.1 per cent higher, while Melbourne values were up 8.9 per cent.
Brisbane was the third best performing capital city for value growth over the year with values up 5.6 per cent followed by Darwin where values rose by 5.0 per cent.
Elsewhere, value growth was more subdued with increases of 3.4 per cent in Perth, 4.3 per cent in Adelaide, 4.4 per cent in Hobart and 0.9 per cent in Canberra.
Despite the fact that the annual increase in home values is slowing, other indicators remain strong, Mr Lawless said.
“Auction clearance rates continued to hover around the 70 per cent mark week-to-week while volumes across RP Data real estate agent and valuation platforms remained strong, which is indicative of heightened levels of industry and mortgage market activity,” he said.
“The number of new properties listed for sale continues to rise as are total listing numbers.”
However, Mr Lawless said that the fairly rapid rate of sale is resulting in a slower increase in total listings than new listings.
Conditions across capital city rental markets remained subdued, with weekly rents rising by only 1.8 per cent over the past twelve months – the lowest annual change in capital city rents since the year ending August 2003.
According to Mr Lawless, the consistent over-performance of dwelling values compared with dwelling rents has been compressing yields.
“With rents being substantially outpaced by dwelling values, the rental yield scenario is slimmest in Melbourne where the typical house is achieving a gross yield of just 3.3 per cent while Sydney’s average yields aren't a great deal higher at 3.7 per cent,” he said.
“Darwin and Hobart are showing a much healthier yield profile with the typical dwelling providing a gross yield of 5.4 per cent and 5.9 per cent respectively.”