Over the five years to December 2004, combined capital city home values increased by a total of 77.0% compared to total growth of just 19.7% over the most recent five years highlighting lower overall capital growth conditions recently.
The CoreLogic RP Data Home Value Index has been published since December 1995. Between December 1995 and December 2014, combined capital city home values have increased by a total of 299.3%, or an annual compounding growth rate of 7.6%.
The first chart shows overall home value growth in the period up to 2004 was much stronger than it has been over the period since that time. While home values recorded no annual falls between 1995 and 2007, from 2008 to 2014 there have been three years where home values have fallen across the combined capital cities.
Quarterly and annual change in combined capital city home values
If you break the growth in value into five year increments you can more clearly see the divergence in growth across capital cities. Furthermore it becomes evident that the rate of home value growth has generally slowed over time.
Over the most recent five year period, combined capital city home values have increased by 19.7% however, this growth has been largely evident in Sydney and Melbourne. While home values have increased by 35.5% and 20.3% in Sydney and Melbourne over the past five years, the next best performing city for growth was Perth with values only rising by 7.6%. In Hobart, home values have fallen over the past five years, down by -7.2% The limited growth in values outside of Sydney and Melbourne has been an ongoing trend since the end of the financial crisis, with the country’s two largest cities the standouts for capital growth after the crisis.
Total change in capital city home values, five years to December 2014
Although Sydney has seen the greatest increase in home values over the most recent five years, it is a very different story over the previous five years. Between December 2004 and December 2009, Sydney home values increased by a total of 13.1% compared to 35.5% over the most recent five years.
Across the combined capital cities, home values increased by 36.3% between December 2004 and December 2009. Values rose in each city with Darwin (101.3%) and Perth (79.4%) the standout performers. Sydney was the weakest performed city over the five year period with values rising by 13.1%. Home values rose by 28.8% in Hobart and by 32.3% in Canberra while the remaining five capital cities all recorded total value growth which was in excess of the combined capitals benchmark (36.3%).
Total change in capital city home values, five years to December 2009
Combined capital city home values increased by a much greater 77.0% over the five years to December 2004. Of course, this period encapsulated the national housing boom which occurred between 2001 and 2004. The standout cities for capital growth over this five year period were: Hobart (157.4%), Brisbane (115.8%) and Canberra (114.2%). Sydney (64.5%) and Melbourne (71.9%) along with Darwin (37.8%) recorded comparatively weaker value growth over this period which was also below the combined capital city benchmark.
Total change in capital city home values, five years to December 2004
The rate of combined capital city home value growth has slowed across each of the most recent five year periods highlighted. This would seemingly provide some insight into the likely performance of the housing market over the coming years. Although mortgage rates are at historically low settings and may move even lower this year, we are already seeing the rate of home value growth slowing in all cities. Mortgage rates are just one of the considerations for a buyer looking to purchase residential property. Mortgage size, likelihood of unemployment, economic conditions and family lifecycle are also important factors for purchasers to consider.
The data from the recent five years would suggest that those cities outside of Sydney and Melbourne may have scope for stronger capital growth over the coming five years given their recent weak performance. Of course the performance of all cities will largely be dictated by overall economic and demographic factors.
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