All but one capital city has shown a lift in property prices over the first four months of the year, but capital gain trends are well down from 2015 peaks, according to CoreLogic RP Data.
The latest Home Value Index (HVI) found dwelling values across the combined eight capitals are now 3.3% higher than they were at the start of the year. This included above-average gains of 4.5% in Sydney and Adelaide and 4.4% in Hobart, while Melbourne met the average.
Sydney unit prices were the star performers in April, up 3.7% for the month. Brisbane houses made their strongest monthly annual value gain in two years, while Adelaide house prices were their strongest in 20 months.
Property prices were flat in Perth over the month and went backwards in Hobart and Darwin.
Melbourne continues to be the dominant capital for annual price growth across all dwellings, with year-on-year (YoY) value gains of more than 10%. Sydney was not far behind on 8.9% YoY, followed by Brisbane (6.2%) and Canberra (4.5%).
Darwin, down 3.7%, and Perth, down 2.1%, were the only capitals to go backwards over the year to 30 April. But unlike Perth, Darwin has shown some slight recovery over the 2016 calendar year so far.
Slowdown in ‘16
CoreLogic RP Data research director, Tim Lawless, said "the results show value growth moved at a faster pace compared with the final three months of 2015 when capital city dwelling values slid 1.4 per cent lower off the back of weaker market conditions in Sydney and Melbourne”.
He added that "while we’ve seen capital gains moderate substantially after peaking last year in Sydney and Melbourne, dwelling values continue to trend higher, just not as fast".
Sydney's YoY growth of 8.9% is well down on the 18.4% rate seen in July last year.
What do the figures mean?
CBA senior economist Michael Workman argued the slowing price rise trends across the capitals is likely to mean that "the housing markets will continue to cool over the coming year" and be flat by year end.
He attributed this prediction to the record levels of new construction activity, weaker population growth trends, stricter housing lending guidelines enforced by the regulator APRA and banks lifting mortgage rates in late 2015 and early 2016 independently of the Reserve Bank's cash rate announcements.
"The issues around the decline in mining investment and lower bulk commodity prices mean that the housing markets in Brisbane, Perth and Darwin must have weaker demand conditions through 2016," Workman said.
"In sharp contrast, there could be a continuation of the unusually firm demand conditions in Sydney and Melbourne because of reasonably good employment growth and firm overseas investor interest in new properties. So there could be a clear divergence in price outcomes over the coming year between the more populous states and the others."
CommSec economist Savanth Sebastian added: "It is clear that the cheaper end of the housing market is now seeing a more credible lift in home prices."
"And while we expect more subdued price growth over the medium term, the lower mortgage rates on offer will continue to support housing activity," he said.
State of the States
The figures came as CommSec released its quarterly State of the States report ranking the economic performance of every Australian state and territory. It found the WA economy slipped another place over the quarter to sixth, while Victoria edged closer to top-ranking NSW.
The report also found Victoria edging ahead of NSW to finish first of all states for housing finance, although NSW is still comfortably ahead on new home building (dwelling commencements).