Capital city dwelling values moved 1.4% higher over the month, taking the combined capital city index

to an annual growth rate of 12.9%; the highest annual rate of growth since the twelve months ending

May 2010. Four of Australia’s eight capital cities are now showing an annual growth rate in dwelling

values higher than 10%, while Perth and Darwin values continue to trend lower on an annual basis.

Cumulative change in dwelling

values from Jan 2009 to

current (Post GFC growth)

Change in dwelling values

over past twelve months

Highlights over the three months to March 2017

Best performing capital city: Hobart +5.6%

Weakest performing capital city: Darwin -3.1%

Highest rental yields: Hobart & Darwin with gross rental yield

of 5.0% and Hobart Units at 5.6%

Lowest rental yields: Sydney & Melbourne houses with

gross rental yield of 2.7% and Sydney units at 3.7%

Most expensive city: Sydney with a median dwelling price of

$805,000

Most affordable city: Hobart with a median dwelling price of

$355,000

Index results as at March 31, 2017

Annual change in dwelling

values over past 10 years

Change in dwelling values over

growth cycle to date

According to CoreLogic head of research Tim Lawless, the March

results highlight the continued resurgence in the pace of capital

gains.

He said, “This became evident through the second half of 2016,

fueled largely by lower mortgage rates and a rebound in investment

activity. Since June last year, the CoreLogic capital city hedonic

index has increased by 9.3%.”

“While Sydney and Melbourne recorded the strongest growth

conditions, the annual rate of capital gains has also moved into

double-digit growth in both Hobart (+10.2%) and Canberra

(+12.8%).”

Conditions remain diverse across regions and housing types

Demonstrating the diversity across capital city markets, on an

annual basis, dwelling values in Perth fell by -4.7% and by -4.4% in

Darwin where economic conditions and migration trends remain

weak across both cities. Adelaide and Brisbane also saw dwelling

values continue to trend higher at a sustainable pace with

increases of 3.4% and 3.7% respectively in these cities over the

past twelve months.

According to Mr Lawless the diversity of performance between

houses and units is also a current key feature of the housing

market. Across the combined capitals index, house values were

13.4% higher over the past twelve months compared with a 9.8%

rise in unit values.

He said, “The disparity in growth rates is more significant in those

cities where high new unit supply is more apparent. In Melbourne,

house values were 17.2% higher over the past twelve months

compared with a 5.2% increase across the unit sector. Similarly, in

Brisbane, house values were 4.0% higher over the past twelve

months compared with a 0.2% rise in unit values over the same

period.”

“The weaker growth conditions within the unit markets’ sector

reflect heightened levels of new supply across specific inner city

precincts and also suggests that consumer confidence has been

negatively affected by the warnings of a potential unit oversupply.”

Whether such strong growth conditions can be sustained

much longer is yet to be seen according to Mr Lawless.

“Given the recent policy announcements from the Australian

Prudential Regulation Authority (APRA) are aimed at dampening

investment related credit demand, we can expect lending

conditions for investment purposes will tighten, particularly for

investors with small deposits or those applying for an interest only

loan. Additionally, higher mortgage rates handed down by

Australia’s major banks may contribute towards cooling some of the

exuberance being seen in the largest capital city housing markets.”

“Furthermore, organic constraints in the market are becoming more

pronounced. As examples, record-low rental yields, which imply

dwelling values are out of balance with rents, and heighted

affordability constraints are preventing some prospective buyers

from participating in the market.”

“Record-high levels of apartment supply are also likely to act as a

brake on capital gains in those precincts where supply levels are

high.”

Region Month Qtr YOY

Sydney 1.4% 5.0% 18.9% 22.6% $805,000

Melbourne 1.9% 4.2% 15.9% 19.4% $605,000

Brisbane 0.2% 0.0% 3.7% 8.1% $480,000

Adelaide 0.4% 1.6% 3.4% 7.7% $439,000

Perth 1.0% -1.3% -4.7% -1.0% $475,000

Hobart 3.1% 5.6% 10.2% 16.1% $355,000

Darwin 3.1% -3.1% -4.4% 0.4% $490,000

Canberra 1.4% 5.1% 12.8% 17.5% $586,500

Combined capitals 1.4% 3.5% 12.9% 16.7% $585,000

Rest of State* 0.8% 1.4% 4.0% $380,000

Median dwelling

price

Change in dwelling values Total gross

returns

Gross rental yields over time, largest capital cities

Rental conditions have shown a subtle improvement across

most cities but yields slip to new record lows in Sydney and

Melbourne

While some rental markets have recently seen a rise in the pace

of rental growth, generally, the trend in rental appreciation

remained soft in comparison with the rate of capital gains; growth

in dwelling values is substantially outpacing rental growth in

Sydney and Melbourne and gross rental yields have again

slipped to record lows in these cities. As a consequence, Mr

Lawless said, “This result has dragged the combined capitals

yield profile to a new record-low. The gross yield on a Melbourne

dwelling is now 2.8% while the gross yield on a Sydney dwelling

is similarly low at 2.9%.”

“In the remaining capital cities, there is also downwards pressure

on gross yields as dwelling values outpace rents.”

Low rental yields, higher mortgage rates and stricter lending

policies around serviceability could create budgetary

challenges for investors

With lenders tightening their serviceability models for all

borrowers, having a negative cash flow on an investment property

may become increasingly difficult to service. Mr Lawless said,

“This is a particular concern where investor budgets are

becoming thinly stretched by rising mortgage rates and low

income growth.”

Gross rental yields, houses and units

Houses Units

Media enquiries contact: Mitch Koper, CoreLogic national communications manager:

1300 472 767 or media@corelogic.com.au

The ongoing strength in the housing market is apparent across a variety of other indicators such as settled sales

CoreLogic estimates on settled sales volumes were 1.3% higher across the combined capitals region over the March quarter of 2017

compared with the first quarter of 2016, indicating an improvement in buyer demand compared with a year ago. Mr Lawless said,

“Stronger buyer demand can be attributed to the rising number of investors participating in the market compared with a year ago as well

as the lower cash rate stimulus and population growth. However, overall transaction numbers remain approximately 15.5% lower than

their recent 2013/14 peaks.”

Low listing numbers continue to create urgency for buyers With the number of properties being advertised for sale remaining low,

Mr Lawless said this is creating a heightened sense of urgency in some markets.

Nationally, the number of residential properties advertised for sale was 6.9% lower than a year ago in March, and total listing numbers

were 4.0% lower across the capital cities. Every capital city is now seeing fewer residential properties advertised for sale compared with a

year ago. The largest declines have been in Hobart and Canberra where stock is being rapidly absorbed despite a rise in newly advertised

properties.

Mr Lawless said, “A shortage of advertised stock can contribute to upwards pressure on prices, as prospective buyers experience FOMO

(fear of missing out) which reduces a buyers ability or willingness to negotiate on prices and causes some urgency in the decision making

process.”

Selling times, discounting rates and auction clearance rates remain strong across the ‘hot’ markets The low stock numbers are

also evident in an analysis of CoreLogic selling metrics. Auction clearance rates have remained in the mid-to-high 70% range across the

combined capitals since early February; largely the result of the high clearance rates in the prime auction markets of Sydney, Melbourne

and Canberra. Additionally, private treaty measures show that the average selling time remains low across the strongest markets. Homes

are selling in approximately 30 days across Sydney and Melbourne, while discounting rates are well below 5.0% in these markets as well.

Mortgage demand remains high Mortgage demand has also been strong across the month of March, with the CoreLogic Mortgage

Index rising 8.1% over the twenty-eight days ending March 26. CoreLogic mortgage platforms track mortgage related activity, accounting

for more than 95% of lender valuation events, including refinancing. The index shows a strong correlation with the ABS housing finance

data, indicating mortgage demand has remained strong over the first quarter of the year.

How will the recently announced APRA supervisory measures impact on the market? According to Mr Lawless the coming months

will provide an indication about how investors and lenders respond to new APRA polices released to the market on March 31.

He said, “The additional APRA supervisory measures to reinforce sound residential mortgage lending practices in ‘an environment of

heightened risks’ focus on dampening investment demand, but not quelling enthusiasm from this segment completely.”

“Based on housing finance commitments data for January from the Australian Bureau of Statistics (ABS), investors currently comprise

slightly more than 50% of mortgage demand (excluding refinanced loans).

“Considering the unprecedented level of high-rise unit construction currently underway, a large portion of which is reliant on investors

absorbing the supply, a material decline in investment activity could result in a growing level of settlement risk for newly developed unit

projects.”

National Media Release cont’d

CoreLogic Hedonic Home Value Index Results

The indices in grey shading have been designed for trading environments in partnership with the Australian Securities Exchange (www.asx.com.au). Indices

under blue shading (Hobart, Darwin, Canberra, Brisbane and the 8 capital city aggregate) are calculated under the same methodology however are not

currently planned to be part of the trading environment.

*The median price is the middle price of all settled sales over the three months to the end of the final month. Median prices are provided as an indicator of

what price a typical home sold for over the most recent quarter. The median price has no direct relationship with the CoreLogic Hedonic Index value. The

change in the Index value over time reflects the underlying capital growth rates generated by residential property in the relevant region.

The CoreLogic Hedonic Index growth rates are not ordinarily influenced by capital expenditure on homes, compositional changes in the types of properties

being transacted, or variations in the type and quality of new homes manufactured over time. The CoreLogic ‘index values’ are not, therefore, the same as the

‘median price’ sold during a given period. See the methodology below for further details.

Methodology: The CoreLogic Hedonic Home Value Index is calculated using a hedonic regression methodology that addresses the issue of compositional

bias associated with median price and other measures. In simple terms, the index is calculated using recent sales data combined with information about the

attributes of individual properties such as the number of bedrooms and bathrooms, land area and geographical context of the dwelling. By separating each

property comprising the index into its various formational and locational attributes, differing observed sales values for each property can be separated into

those associated with varying attributes and those resulting from changes in the underlying residential property market. Also, by understanding the value

associated with each attribute of a given property, this methodology can be used to estimate the value of dwellings with known characteristics for which there

is no recent sales price by observing the characteristics and sales prices of other dwellings which have recently transacted. It then follows that changes in the

market value of the stock of residential property comprising an index can be accurately tracked through time. CoreLogic owns and maintains Australia’s largest

property related database in Australia which includes transaction data for every home sale within every state and territory. CoreLogic augments this data with

recent sales advice from real estate industry professionals, listings information and attribute data collected from a variety of sources. For detailed

methodological information please visit www.corelogic.com.au

Recent updates to the CoreLogic Hedonic Home Value Index – April/May 2016

CoreLogic’s periodic audits of analytic methods and algorithms identified an improvement to the Hedonic Index sampling methodology in early 2016 which

was applied throughout April. CoreLogic implemented a dynamic mechanism for excluding extreme (outlier) transactions. After rigorous back testing and

validation, it was determined that dynamic price filters would deliver a more robust and precise output. As a result of these changes, the CoreLogic Hedonic

Index recorded higher than normal intra-month volatility in the capital city index readings throughout April and May. This improvement will ensure that the

Hedonic Home Value Index will continue to represent the timeliest and most precise measurement of housing market conditions available.

For more information on the CoreLogic Indices, please go to http://www.corelogic.com.au

About CoreLogic CoreLogic Australia is a wholly owned subsidiary of CoreLogic (NYSE: CLGX), which is the largest property data and analytics company in

the world. CoreLogic provides property information, analytics and services across Australia, New Zealand and Asia, and recently expanded its service offering

through the purchase of project activity and building cost information provider Cordell. With Australia’s most comprehensive property databases, the

company’s combined data offering is derived from public, contributory and proprietary sources and includes over 500 million decision points spanning over

three decades of collection, providing detailed coverage of property and other encumbrances such as tenancy, location, hazard risk and related performance

information.

With over 20,000 customers and 150,000 end users, CoreLogic is the leading provider of property data, analytics and related services to consumers,

investors, real estate, mortgage, finance, banking, building services, insurance, developers, wealth management and government. CoreLogic delivers value

to clients through unique data, analytics, workflow technology, advisory and geo spatial services. Clients rely on CoreLogic to help identify and manage growth

opportunities, improve performance and mitigate risk. CoreLogic employs over 650 people across Australia and in New Zealand. For more information call

1300 734 318 or visit www.corelogic.com.au

CoreLogic Home Value Index tables

National Media Release cont’d

Media enquiries contact: Mitch Koper, CoreLogic national communications manager:

1300 472 767 or media@corelogic.com.au

Capital Growth to 31 March 2017 Sydney Melbourne

Brisbane –

Gold Coast Adelaide Perth

Australia 5

Capitals

(ASX) Hobart Darwin Canberra Brisbane

Australia

8 Capitals

Table 1A: All Dwellings

Month 1.4% 1.9% 0.5% 0.4% 1.0% 1.4% 3.1% 3.1% 1.4% 0.2% 1.4%

Quarter 5.0% 4.2% 0.6% 1.6% -1.3% 3.5% 5.6% -3.1% 5.1% 0.0% 3.5%

Year-to-Date 5.0% 4.2% 0.6% 1.6% -1.3% 3.5% 5.6% -3.1% 5.1% 0.0% 3.5%

Year-on-Year 18.9% 15.9% 4.6% 3.4% -4.7% 12.9% 10.2% -4.4% 12.8% 3.7% 12.9%

Total Return Year-on-Year 22.6% 19.4% 9.2% 7.7% -1.0% 16.7% 16.1% 0.4% 17.5% 8.1% 16.7%

Median price* based on settled sales over quarter $805,000 $605,000 $490,000 $439,000 $475,000 $585,500 $355,000 $490,000 $586,500 $480,000 $585,000

Table 1B: Houses

Month 1.6% 2.0% 0.4% 0.1% 1.1% 1.4% 2.6% 1.6% 1.7% 0.1% 1.5%

Quarter 4.9% 4.4% 0.5% 1.3% -1.3% 3.4% 5.8% -3.5% 5.4% -0.1% 3.4%

Year-to-Date 4.9% 4.4% 0.5% 1.3% -1.3% 3.4% 5.8% -3.5% 5.4% -0.1% 3.4%

Year-on-Year 19.7% 17.2% 4.9% 3.6% -4.6% 13.4% 11.0% -7.0% 13.6% 4.0% 13.4%

Total Return Year-on-Year 23.2% 20.5% 9.4% 7.8% -1.0% 17.0% 16.9% -2.1% 18.3% 8.4% 17.1%

Median price* based on settled sales over quarter $880,000 $677,000 $539,000 $460,000 $495,000 $620,000 $380,000 $529,700 $680,000 $512,000 $613,200

Table 1C: Units

Month 0.7% 0.8% 1.7% 4.0% -0.7% 0.9% 7.8% 9.2% -3.2% 1.6% 0.9%

Quarter 5.6% 2.9% 0.9% 5.1% -1.6% 4.2% 3.0% -1.5% 0.2% 1.1% 4.2%

Year-to-Date 5.6% 2.9% 0.9% 5.1% -1.6% 4.2% 3.0% -1.5% 0.2% 1.1% 4.2%

Year-on-Year 15.3% 5.2% 1.9% 1.7% -5.5% 9.8% 2.7% 6.9% 1.6% 0.2% 9.8%

Total Return Year-on-Year 19.8% 9.5% 7.5% 6.6% -1.4% 14.4% 8.5% 11.3% 7.0% 5.5% 14.3%

Median price* based on settled sales over quarter $715,000 $482,000 $395,000 $365,000 $400,000 $510,000 $316,100 $422,500 $420,000 $385,000 $512,200

Table 1D: Rental Yield Results

Houses 2.7% 2.7% 4.1% 4.0% 3.6% 3.0% 5.0% 5.0% 4.0% 4.1% 3.0%

Units 3.7% 4.0% 5.2% 4.5% 4.2% 4.0% 5.6% 3.6% 5.2% 5.1% 4.0%

 

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