Sydney, Melbourne house values surge through start of the year

House values across the nation’s capital cities surged another 1.1 per cent through January with Sydney and Melbourne poised to break key price barriers.

CoreLogic on Monday (03/02/2020) reported that house values in Sydney alone rose by 1.5 per cent in January, taking the median value there to $994,300. Over the past quarter, values rose by 6.7 per cent or by more than 27 per cent at an annualised rate.

Melbourne was not far behind. House values there lifted by 1.4 per cent last month with the median value reaching $798,671. Over the quarter, values were up by 5.6 per cent or by more than 22 per cent at an annualised rate.
All major capitals reported a rise in house values through the month. They were up by 0.7 per cent in Brisbane, by 0.2 per cent in Adelaide, by 0.1 per cent in Perth, by 0.9 per cent in Hobart and by 0.3 per cent in Canberra.

Over the past year, Sydney prices have risen by 9.3 per cent while in Melbourne they have lifted by 8 per cent.

The unit market is a little softer. Values in Sydney rose by 0.3 per cent to be 4.9 per cent up over the year while in Melbourne they have climbed by 0.7 per cent to be 8.7 per cent up over the past 12 months.
Despite the lift, Sydney dwelling values are still 5.4 per cent short of their 2017 peak. Melbourne is 1.2 per cent below its peak.
CoreLogic head of research Tim Lawless said despite the increase in January there were some signs of a slowdown.

“Seasonal effects provide some explanation for the slowdown,” he said.

“Factoring in the seasonal effect, the latest results indicate a reduction in the speed of growth across most markets, especially for Sydney and Melbourne where affordability constraints are once again becoming more pressing.
“As advertised stock levels rise over the early part of the year, we could see some dampening of growth rates.”
The Reserve Bank board holds its first meeting of the year on Tuesday with markets putting the chance of an interest rate cut at 14 per cent. But the same markets and most economists believe the RBA will take the cash rate to a fresh record low of 0.5 per cent by the middle of the year. The outbreak of the coronavirus and season’s bushfires are expected to be discussed at the board meeting with growing concern that combined they will have a material impact on economic growth.
Mr Lawless said the strongest gains continued to be in the most expensive part of the property market.

Dwelling values in Melbourne’s inner east have lifted by 16.2 per cent over the past year while those in the city’s inner south have improved by 11.2 per cent.

The strongest part of the Sydney market is the Baulkham Hills and Hawkesbury area where values have increased by 13.5 per cent over the past year.

Article Written by By Shane Wright. February 3, 2020
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.
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