Home values have slipped a further 0.1% across Australia in February, sliding for the fifth consecutive month for the first time since March 2016, according to the CoreLogic Home Value Index results out today.
While values decreased by 0.3% across the combined capital cities in February, regional values have increased by 0.4%. Since peaking in September last year, dwelling values have been flat or in decline.
Values down across the capital cities
Prices fell in six of the eight capital cities in February, including Darwin, Sydney, Canberra, Perth, Melbourne and Brisbane.
Home prices are now lower in Sydney than they were a year ago.
In Sydney, dwelling values decreased by 0.6% for the month, down 2.4% for the quarter. The median home value in Sydney is now $880,743.
Sydney has now slipped into negative annual growth for the first time since 2012, with values down 0.5% for the past 12 months.
In Melbourne, dwelling values were down 0.1% for the month, contributing to a 0.4% decrease through the quarter. The median home value in Melbourne is now $723,334.
Hobart has been the best performing capital city, with values increasing by 0.7% for the month, 3.2% for the quarter, and 13.1% for the year. The median value in Hobart is $416,840.
“The rebalancing of the housing market should be closely watched, but it is not a cause for concern,” said Craig James, CommSec Chief Economist. “Supply and demand are always in adjustment in housing markets. Sydney prices may ease a little further and Melbourne prices also have potential to soften over 2018.”
Regional capitals outperforming cities
In the country’s regional areas, dwelling values increased by 0.9% over the quarter, with values higher in all regional areas except for Western Australia. While value growth has slowed across the country, over the 12 months to February 2018 city values increased by 2% while regional values increased by 2.8%.
“There are more anecdotes of ‘rent-vesting’ occurring where young people from Sydney and Melbourne are buying in other capital cities and regional areas and using rent proceeds to offset their costs of leasing in inner-city Sydney and Melbourne,” said Craig James.
Rental returns increasing
Falling values have led to higher rental yields, according to Tim Lawless, head of research at CoreLogic. “This is because value growth has slowed, then fallen, while rental rates have continued to rise,” he said.
The strongest performing rental market was Hobart where rents increased by 10.2% over the past year, the first time it has recorded double-digit annual growth since 2009.