Sydney’s housing market has a “second wind” with 15.5% annual house price growth: CoreLogic RP Data

Housing prices increased in all capital cities but Canberra last month, according to CoreLogic RP Data.

In the three months to April, Sydney had the largest price increase. Home prices in the New South Wales capital increased by 5.4% over the quarter. CoreLogic RP Data head of research Tim Lawless says the city has seen a “second wind”, with 15.5% annual growth for houses.

“Annually, the rate of capital gain has slowed since April last year, however, since the February rate cut the Sydney and, to a lesser extent, Melbourne housing markets have caught a second wind which is reflected in the higher rate of capital gain as well as the very strong auction results and rapid rate of sale for properties sold via private treaty.

Capital city home prices have increased by 25.3% between the end of May 2012 and April 2015. In Sydney, the median house price is now $850,000, according to CoreLogic RP Data – somewhat lower than the $914,056 estimated by the Domain Group. Sydney continues to outpace the other capital cities, says Lawless.

“While the combined capitals trend of dwelling value growth has been substantial, the rate of growth across the Sydney housing market stands head and shoulders above the other capital cities over the cycle to date,” he said.

“Sydney dwelling values are now 40.2% higher relative to the May 2012 trough.

“If you factor in the previous 2009/10 phase of growth, Sydney values are now up 65.4% post GFC.”

Only Melbourne approaches this level of growth, with dwelling values up 52.3% since the global financial crisis (GFC).

According to Lawless, some of the capital cities are “winding down”.

“The rate of growth in Perth and Darwin has slowed substantially in line with the wind down of major infrastructure projects associated with the resources sector and the housing market in Canberra has also softened post federal election,” he said.

Houses continue to outperform units, with detached house prices increasing 8.3% over the year, compared to 5.6% price growth for units. In Sydney and Melbourne this is particularly evident. Sydney house prices have increased by 15.5% over the past year, but units have increased by 9.7%. In Melbourne, house values have risen by 7.6%, but units have only increased in price by 1.9%.

Across the capitals, dwelling prices increased by 0.8% for the month. Hobart recorded the greatest monthly climb, with prices increasing by 1.6%.

CoreLogic RP Data figures show that in almost every capital city, rents are growing at a slower pace than housing prices, decreasing yields. In Melbourne, the average gross yield for a house is 3.2%, while in Sydney it is 3.4%.