Australia’s property market has reached a turning point, with smaller cities taking more of a front row seat in the growth story.
CoreLogic’s monthly figures show the capital cities with the biggest property price increases in November were Canberra (+0.9pc) and Hobart (+0.6pc).
Melbourne dwelling values, on average, rose 0.5 per cent last month to take third place. The median price in Australia’s second largest city is about $718,000.
Sydney prices fell by 0.7 per cent in November, and by 1.3 per cent over the last quarter — September to November.
But buyers should not get too ahead of themselves as Sydney is still the most expensive property market by far, with a median price of about $904,000.
The only other capital city which saw its property prices drop was Darwin (-0.4pc in November, and -5.5pc in the last year).
“Darwin’s property market peaked in 2014, and has fallen by about 21 per cent since then,” CoreLogic’s head of research Tim Lawless told the ABC.
What’s driving the biggest gains?
Hobart was the best performing housing market by far — with prices up by 3.3 per cent in the last three months, and 11.5 per cent over the last year.
When asked why, Mr Lawless said it was “sheer affordability of housing” which drove the Tasmanian capital’s gains.
The typical price of a house in Hobart is about $420,000, versus over $1 million in Sydney.
But when apartments are factored in, the median dwelling values in Hobart and Sydney are $398,000 and $904,000 respectively.
“Buying power is much more substantial in Hobart, especially if you’re cashing out of Melbourne and Sydney,” he said.
“People’s money goes a lot further in Hobart, and there’s a renewed trend towards buying into lifestyle markets.
“Also, the rental market is strong, with yields here much higher compared to other capital cities — which attracts more investment.”
Canberra’s housing values gained 10.6 per cent over the last year (beating the national average of 9.2 per cent).
Its property prices also lifted by 0.9 per cent in November (the highest of any capital city), and 1.3 per cent in the last three months.
As for the reasons behind Canberra’s gains, Mr Lawless said it was due to “reasonably strong jobs growth” and public sector wages growth outperforming the private sector (since the nation’s capital has a high concentration of public service roles).
A tale of two cities — Melbourne beats Sydney
When it comes to housing prices, Melbourne has beaten Sydney.
Melbourne prices lifted by 1.9 per cent over the last quarter, and by 10.1 per cent in the last year.
In comparison, Sydney prices property prices fell by 1.3 per cent in the last quarter. But on a yearly basis, Sydney prices increased by 5 per cent — which was just half of Melbourne’s annual gain.
“Tightening lending conditions” are also behind Sydney’s downturn, as it is feeling much sharper and “more immediate” effects compared to other cities, Mr Lawless said.
He attributed that to the higher concentration of investor housing purchases in the nation’s largest city.
On the other hand, Mr Lawless said Melbourne was “very resilient to a slowdown, as it has less problematic housing affordability compared to Sydney”.
The median price of a dwelling in Melbourne was about $718,000 — which is almost $200,000 cheaper compared to Sydney’s median price.
He also said Melbourne had “high rates of population growth, from interstate and overseas, a stronger labour market, and higher levels of job creation”.
Regional property trumps Perth, Adelaide and Brisbane
It also appears the Perth market has begun to recover, as housing prices lifted by 0.3 per cent in the last three months.
“If this is indeed the start of a recovery phase in the Perth housing market, it comes after dwelling values have fallen 10.8 per cent since peaking in mid-2014,” he said.
For Brisbane and Adelaide, they will face a “continuation of slow and steady growth”.
While Brisbane property prices rose by a slight 0.1 per cent in November, Adelaide’s prices remained firmly flat.
The regional property markets also performed strongly.
The strongest gains were seen in the regional markets of Newcastle and Lake Macquarie in NSW — its housing values lifted by 13 per cent in the past year.
Properties in the Gold Coast, Sunshine Coast and Byron Bay (the “lifestyle markets”) were also popular — rising by more than 5 per cent each year.
Mr Lawless said that was driven by buyers who wanted to buy a second home or holiday house, wanted a sea change, or were getting ready for retirement living.