Property prices across the combined capital cities went up over September, but for once Sydney's contribution pulled the national figure down rather than boosting it.
While dwelling values in the combined capitals were up 0.3% for the month, according to the latest CoreLogic numbers, Sydney's fell 0.1%, including a 0.3% fall in house prices. Value growth of 0.2% in apartments helped buffer the Harbour City's property market overall, but not enough to prevent its first month of negative growth in 17 months.
Sydney house prices also posted a quarterly value loss of 0.2%, joining Perth and Darwin as the only capitals to go backwards over the three months to 30 September.
CoreLogic Head of Research, Tim Lawless, suggested "the affordability challenges facing Sydney buyers within the detached housing sector are pushing more demand towards the medium- to high-density sector, where, based on median values, houses are almost $290,000 more expensive than units".
Hobart heats up
Despite relatively weak performance, Sydney remains the only capital to have a seven-digit median house value, clocking in at $1,074,552, more than 2.5 times that of the most affordable capital city, Hobart.
But the Tasmanian capital continues to outperform all others for value growth, posting the strongest monthly, quarterly and yearly percentage increases.
CommSec Chief Economist, Craig James, argued that as property prices in Sydney and Melbourne have surged in recent years, "budding investors and home owners [are moving] away from the relatively expensive cities in search for greater value elsewhere.
"The case in point is Hobart. Home buyers appeared to have flocked to the Apple Isle. Clearly there is a new home price leader," he said.
"And there is potential for prices to lift in other cities and towns over the next year as home buyers search for better value and potential returns."
CoreLogic figures highlight strong performance in regional markets adjacent to the Sydney and Melbourne metro areas, including annual growth of more than 14% in the Southern Highlands and Shoalhaven regions, and an increase of 11.4% in Geelong.
Population growth is key driver
James did warn, however, that "higher home prices won't be supported if underlying population growth is not there".
Recent ABS statistics confirmed Victoria has the strongest population growth of all the states, which Lawless said is "likely one of the key factors contributing to the resilience of Melbourne's housing market to a broader slowdown in value growth".
Melbourne has seen year-to-date (YTD) growth of 8% across its combined house and unit market, second only to Hobart (8.9%) and well ahead of Sydney (5.3%). Lawless also pointed to consistently higher auction clearance rates, low advertised stock rates and fast-selling private treaty sales to argue Melbourne's housing market is the stronger overall of the two major cities.
James suggested that despite the slowdown in the Sydney market, "there are no indications that the [national] housing market is headed for a 'hard landing', although clearly trends will bear watching over the next year or so".
Lawless agreed, saying "while CoreLogic anticipates that dwelling values will trend lower across Sydney and potentially Melbourne later this year or next, strong demand for housing, along with mortgage rates anticipated to remain low, will help to support a floor under housing prices going forward".