How did capital city property prices fare in 2015?
As 2016 gets underway, now is the perfect time to reflect on how the real estate sector has performed over the course of the past 12 months. From the introduction of new measures to limit investment lending to the official cash rate reaching an all-time low, there was no shortage of property-related headlines during 2015.
The Real Estate Institute of Australia (REIA) recently claimed that median house prices were starting to slip across the country. Does this signal the start of a wider trend as we enter 2016? Or is this simply a glitch in the long term data?
Looking back to January
At the start of the year, the January CoreLogic RP Data Home Value Index posted a 1.3 per cent in capital city dwelling values over the course of the month. Real estate in Melbourne and Sydney was the primary driver behind the trend, as both cities witnessed double-digit rises year on year.
This led analysts to refer to a two-tier housing market, which saw some capitals performing decidedly better than others. Between January 2009 and 2015, Sydney’s home values increased 57 per cent, while in Hobart they were unchanged over the six-year period.
At the time, many analysts feared that a property market bubble could form, pricing a growing number of people out and preventing them from buying their first home. This was something experts were quick to dispel early on in the year.
Fast forward to the end of the year
The peak of the current property market cycle may have been reached, as the latest figures show the slowdown in price growth the REIA was alluding to. The CoreLogic November Home Value Index shows real estate in Sydney and Melbourne is feeling the effects, as the cities posted monthly price falls of 1.4 per cent and 3.5 per cent, respectively.
Meanwhile, the September quarter Residential Property Price Index from the Australian Bureau of Statistics revealed a yearly increase of 10.7 per cent across the nation’s capitals. Sydney led the charge with a 19.9 per cent rise, while Perth was at the bottom of the pile with a 3.3 per cent decline.
Looking to 2016
All eyes will continue to be on the property market next year, and especially the official cash rate. The Reserve Bank of Australia is due to meet on 2 February for its first session of 2016, and there’s just no telling which way its decision will go.
In the meantime, pressure does seem to be easing on capital city prices, giving further incentive to look at homes for sale in these locations.