Value growth healthy

Home values around Australia continue to rise despite some disruption from lockdowns, a new report shows.

CoreLogic’s national index has revealed that values rose 1.5 per cent in August. This is the lowest monthly rise since January, yet remains well above average.

All capital cities except Darwin recorded a rise through the month. Sydney was up 1.8 per cent, Melbourne 1.2 per cent, Brisbane 2.0 per cent, Adelaide 1.9 per cent, Hobart 2.3 per cent, and Canberra 2.2 per cent. Values fell marginally (0.1 per cent) in Darwin.

Over the past twelve months, all capitals have seen considerable growth, with Sydney up 20.9 per cent, Melbourne 13.1 per cent, Brisbane 18.3 per cent, Adelaide 17.9 per cent, Hobart 24.5 per cent, Canberra 26.8 per cent, and Darwin 29.0 per cent.

The August update takes values 15.8 per cent higher over the first eight months of the year and 18.4 per cent above levels a year ago.

In dollar terms, the annual increase in national dwelling values equates to approximately $103,400, or $1,990 per week.

CoreLogic's research director Tim Lawless said that this is the fastest annual pace of growth in housing values since the year ending July 1989.

“Through the late 1980’s, the annual pace of national home value appreciation was as high as 31 per cent, so the market isn’t quite in unprecedented territory’, he noted.

“The annual growth rate at the moment is trending higher, in fact, it is 3.6 times higher than the thirty-year average rate of annual growth.

“It’s likely the ongoing shortage of properties available for purchase is central to the upwards pressure on housing values”, he added.

Capital city houses are continuing to record stronger growth rate relative to units, however the gap does appear to be narrowing. Throughout the first quarter of the year, capital city house values were rising approximately 1.1 percentage points faster than units each month. By August the average performance gap reduced to 0.7 percentage points.

Lawless believes the convergence of growth in house values and unit values could be another demonstration of affordability becoming more challenging.