Market roundup March 2015
We look back at how Australia’s housing market fared in March 2015, and what might be ahead in the months to come.
Sydney had another big month in March with property values rising 3.0%, according to the CoreLogic Home Value Index. Canberra values were up 1.9%, Darwin up 0.9% and Melbourne up 0.6%.
Sydney prices rose 5.8% over the quarter and 13.9% over the year. Australia’s largest city is outperforming all the other capitals to such a degree that it is the only housing market with annual growth in double digits.
Next best performer, Melbourne, is up 5.6% over the year. No other state or territory capital has been able to muster annual growth of greater than 3.0%, while values in Perth (down 0.1%), Hobart (down 0.3%) and Darwin (down 0.8%) have dropped.
The 5.8% quarterly growth in Sydney dwelling values is the strongest since home values increased by 6.2% over the three months to April 2009.
“Sydney and Melbourne are experiencing firmer dwelling price rises than the other capitals, says our Senior Economist Michael Workman. “And it is likely to continue in the short term.”
“But in these two cities there will be considerable additions to the dwelling stock over 2015, and possibly 2016, that should help ease some of the affordability issues.”
The number of residential building approvals fell by 3.2% in February, according to the latest figures from the Australian Bureau of Statistics (ABS). But this fall followed four months of rising approvals, and the annual rate of growth in approvals was at a healthy 14.3%.
Multi-unit approvals are leading the way. While these fell 6.0% in February, they were still up by an enormous 36.2% year-on-year. In contrast, approvals for private houses were down 0.1% in February and down 1.0% compared with the previous year.
The value of alterations and additions spending rose by 4.7%, putting annual growth at 4.2%.
Our Senior Economist, John Peters, says 2015 is going to be a big year for construction.
“The underlying continuing strength of building approvals means that the number of dwellings constructed is forecast in 2015 to be close to the record 200,000 posted in 2014,” Peters says.
Lending for housing was weaker in January, according to the latest figures from the ABS. The value of loans to owner-occupiers fell 1%, but remained 7.1% higher than previous year.
Investor-related lending dropped by 0.1% in January, but remained a massive 22.1% higher over the year.
Our Senior Economist Michael Workman says investors are driving the market. “Investors are the major influence on the housing market currently, especially in the inner-city suburbs of the major cities,” Workman says.
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This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information. Commonwealth Bank of Australia ABN 48 123 123 124.