Sydney house values fall in September as capital gains continue to lose steam.
According to analysis by CoreLogic head of research Tim Lawless, the combined capital city trend growth rate is clearly losing steam with dwelling values rising by 0.7% over the September quarter and well down from the recent peak rate of quarter-on-quarter growth which was recorded at 3.5% over the December 2016 quarter.
Mr Lawless said, “This slowing in the combined capitals growth trend is heavily influenced by conditions across the Sydney market where capital gains have stalled.”
The September quarter saw Sydney dwelling values edge 0.2% higher and values slipped 0.1% lower over the month. Sydney’s quarterly result was the slowest since values declined by 2.2% over the March quarter of 2016 and it’s the first month-on-month decline after 17 months of consistent capital gains.
For the Sydney housing market, concerns around unit oversupply is less evident compared with the Brisbane unit sector, or to a lesser extent with Melbourne.
Melbourne’s housing market is also showing slower growth
conditions, however growth remains relatively resilient compared with Sydney. Dwelling values were almost 1% higher over the month of September and rose by 2.0% over the September quarter.
Adelaide dwelling values held firm over the month but have shown a 5.0% rise over the year.
Investment mortgage rates are generally showing a 60 basis point premium over owner occupier rates, and premiums are higher for interest only loans. Mr Lawless said, “Slower rates of capital gain against a backdrop of low rental yields and tighter finance is likely to be creating a dent in investor sentiment and potentially encouraging investors to seek out markets with a more balanced yield profile coupled with better prospects for capital gain.”
While CoreLogic observations indicate that investor demand may trend lower due to higher mortgage rates and tighter credit policies, first home buyers are clearly increasing their presence across the housing market. Based on housing finance commitments data, first home buyer activity surged higher in New South Wales and Victoria as first timer buyers took advantage of stamp duty concessions that went live on July
1st. Between June and July, the number of first home buyer
commitments increased by 28% across New South Wales and 11% across Victoria.
First home buyer numbers are trending higher across other states where stamp duty rules were unchanged, suggesting that lower affordability barriers and an increasing appetite for owner occupier lending is fueling a broader rebound across the first time buyer segment.
Source: CoreLogic
