The national property market has seen another month of flat value growth, as decent gains in Melbourne, Canberra and Hobart were all cancelled out by falls in Sydney.
Dwelling prices in the Harbour City went backwards by 0.7% over November, the fourth consecutive monthly drop since July. This included a drop of 1.1% in house prices, although apartments remained steady.
With combined house and unit prices down 1.3% over the three months to 30 November, Sydney posted its weakest quarterly performance since March 2016.
By contrast, Melbourne dwelling values increased by 0.5% and 1.9% for the month and quarter respectively as CommBank Senior Economist Gareth Aird identified "a clear divergence opening up between property price growth in Sydney and Melbourne". Dwelling prices in the Victorian capital have gone up by over 9% in 2017, more than double the rate of Sydney's growth for the year.
Aird attributed Melbourne's price rises to "incredibly strong population growth of around 3% per annum".
The Sydney shadow
Stronger results in Melbourne weren't enough to prevent flat growth across the combined capitals in November and only a marginal rise over the quarter.
"Softer housing market conditions across Sydney, which comprises roughly one-fifth of national dwelling stock (and approximately one-third by value), has a material influence over the headline growth trends,” said CoreLogic Head of Research, Tim Lawless.
Sydney's underperformance masked strong gains in Hobart, the best-performing capital city market of 2017, where dwelling prices increased by 3.3% over the quarter. But as Lawless pointed out, "[Hobart and Darwin] together... account for less than 1.5% of total housing stock in Australia, [so] they have had little effect on the overall headline figures”.
Similarly, Sydney dwarfed monthly price growth of almost 1% in Canberra.
The other capitals
There was more encouraging news out west, where Perth finally posted both monthly and quarterly increases – the capital's first rolling quarterly gain in three years.
"If this is indeed the start of a recovery phase in the Perth housing market, it comes after dwelling values have fallen 10.8% since peaking in mid-2014,” said Lawless.
One upside of Sydney's falling property prices has been a slight lift in rental yields. Melbourne now offers the lowest gross rental yields for houses of all the capitals at 2.6%, with Sydney second-lowest at 2.9%. By contrast, Darwin offers gross house rental yields of 5.7%.
Sydney's apartment yields remain the nation's lowest at 3.6%.
The mixed performance of the capitals over 2017 means some cities are likely to soon lose certain mantles they've long held. Darwin, for example, is tracking downwards to take Adelaide's title of mainland capital with the lowest median dwelling price.
And Hobart's strong annual gains in its unit market are putting it on track to have a higher median price than Adelaide and no longer be the most affordable capital for apartments.