Fresh from its AFL and NRL teams winning and finishing runners-up in their respective grand finals, Melbourne has also topped the capital cities across the country for home value growth.
According to Core Logic’s Home Value Index, Melbourne dwelling prices saw an average increase of 5% over the past three months, including 2.3% in September alone, taking the median price to $590,000.
But Sydney remains the star performer of 2016 overall, with property prices up almost 13% since 1 January. Melbourne's have gone up a similarly impressive 11% in the same period.
Beyond Sydney and Melbourne
Despite Melbourne and Sydney's dominance of the price premiership ladder, some of the smaller capital city markets have also put in strong performances on the field. They include Canberra and Hobart, where home values have gone up around nine per cent over 2016 so far, and Adelaide, which has seen year-to-date growth of close to six per cent.
Hobart remains the most affordable capital city in Australia in spite of its healthy growth this year, with a median house price of $349,500. Sydney house prices are more than 2.5 times this amount, with a median price tag of $890,000 following an increase of 4% over the past quarter.
The Perth and Darwin property markets continue to see big downturns. A quarterly drop of 3.2% in the WA capital means the median property price there is now $480,000 – equal to the combined Brisbane/Gold Coast median for the first time in many years. Darwin’s median property price is also $480,000, following a three-month fall of 4.5%.
"Demand for homes in Sydney and Melbourne is supported by solid population growth while supply hasn’t caught up. Not yet, anyway – the process is underway. In contrast, the increased supply of new homes in Perth is happening at a time of softening population growth," said Craig James, CommSec chief economist.
Despite variations across the capitals, value growth is the overall trend with property prices now 41.3% higher than June 2012 when the most recent growth cycle started. This has been largely being driven by Sydney and Melbourne.
“Since the end of 2008, Sydney dwelling values increased by almost 95% and Melbourne dwelling values are up 80%," said Tim Lawless, head of research Asia Pacific at Core Logic. "Canberra is the only other housing market where the cumulative capital gain has been greater than 20% post GFC.”
Rent or buy?
What does all this mean for those trying to decide between renting, buying or looking for an investment property? Property prices are increasing at a much faster rate than monthly rents, which is negatively impacting rental yields.
“While we’ve seen values remain relatively strong, in contrast, rental yields have been in the doldrums due to the fact that residential property values are rising at a faster rate than weekly rents. The average gross rental yield across the combined capital city dwelling market has held firm at 3.3% over the month, which is at an historic low,” said Lawless.
Though rental yields have dropped, record low interest rates mean competition is still stiff amongst investors across the country as they look to make the most of capital gains. Last week the auction clearance rate was steady at 77.5% across the capitals, according to preliminary results from Core Logic.