House prices in Melbourne took an atypical step backwards in November following months of solid positive growth, the latest analysis from CoreLogic has found.
Dwelling values in the Victorian capital fell by 1.5% over the month, driven by a drop of 3.2% in apartments and 1.3% in house prices.
Melbourne was the only capital to see a fall in November, with every other city recording value growth of some kind. This included a sharp spike of 3.7% in Darwin dwelling prices and 2.9% in Adelaide.
CoreLogic head of research, Tim Lawless, argued the Darwin numbers, including positive annual growth for the first time since February 2015, pointed to "a moderate improvement in market conditions" in the NT capital.
Growth stronger in houses than apartments
Despite the monthly fall, Melbourne remains on track to see double-digit capital growth over 2016, with year-to-date (YtD) dwelling prices up 10.2%. The growth is almost entirely in house prices, however, up 11.4% for the year so far. Apartment prices have stayed flat since 1 January.
By contrast, Sydney units have seen YtD value growth of more than 10%, as well as a 15.3% increase in its house prices over the year.
“It appears that higher unit supply is progressively weighing down the capital gains across Melbourne’s unit sector, with annual capital gains tracking at 3.9% for Melbourne units compared with a 12.2% annual gain in Melbourne house values,” said Lawless.
“A similar trend can be seen in Brisbane, where the supply of units across key inner city regions is also high," he said. "Brisbane house values were up 4.3% over the past twelve months compared with a 0.9% fall in unit values.
"With the unit supply pipeline remaining substantial, we expect to see a continuation of weaker market conditions across those unit markets where high supply levels are dampening the prospects for higher value growth.”
The figures come in the same week the Australian Bureau of Statistics (ABS) reported a dive of 23.5% in multi-unit building approvals in October. Residential approvals peaked in July.
Coming down from 'dizzying' heights
Despite the typically strong annual performance of the overall Sydney property market and houses in Melbourne, as well as year-on-year (YoY) dwelling capital growth of more than 8% in Canberra and Hobart, CoreLogic noted that the November capital gain reading was the softest result since December 2015.
But CBA senior economist, John Peters, argued the latest figures "underscore the fact that while dwelling price growth has waned over 2016, the underlying price growth pulse across the nation remains reasonably resilient".
He also pointed out any ongoing "cooling" of dwelling price growth is only from the "dizzying" growth rates posted over 2014 and 2015.
"Overall, the November data bolsters the view that the significant rise in Australian dwelling prices that occurred over 2015 is now clearly losing momentum, particularly in Sydney and Melbourne," Peters said. "But that the growth pulse remains reasonably solid in historical terms."
Looking forward, Peters predicted that "solid dwelling construction... and the ongoing dampening impact of the RBA/APRA macro-prudential policies implemented in mid-2015 are likely to help cap dwelling prices growth in coming year".