First rise in Sydney, Melbourne property prices since 2017

A raft of good news around the government and the removal of tax changes has prompted the first rise in two years.

House prices have started to rise again. Picture; AAP.

Sydney and Melbourne property markets have each reported the first rise in values since their 2017 price peaks on the back of improved economic and market conditions, according to CoreLogic’s monthly data released today.

Conditions have been improving in the country’s two largest cities throughout the first half of the year as the market continues to run out of steam, with each reporting smaller month-on-month declines since January, CoreLogic’s Hedonic Home Value Index has shown.

Sydney increased 0.1 per cent for the month during June, the first rise since market peak in July 2017. Melbourne saw its first increase since November 2017, up 0.2 per cent last month.

CoreLogic’s head of research Tim Lawless said that while the location of the improvement was surprising, improved market conditions were always likely to deliver some good news.

“From the middle of May, there’s been a raft of good news around the stability of the federal government and the removal of tax changes relating to property. Then in June, of course, lower mortgage rates. I think we’ve seen a number of outcomes and announcements that have positively affected the marketplace,” Mr Lawless said.

“I guess the big question is: why Sydney and Melbourne? These are the two markets where jobs growth has been the strongest, where unemployment the lowest, where economic conditions are generally much more frothy than any of the other markets around Australia.

“That’s probably the best explanation for why we’re seeing the two markets that are the most unaffordable amongst the capital cities the first responding to all these positive news announcements.”

Auction clearance rates in Sydney and Melbourne have held around 60 per cent throughout June which is a substantial improvement compared to late 2018 when clearance rates were consistently in the low 40 per cent range.

The 0.2 per cent drop on a national level was the smallest month-on-month decline since March 2018, primarily driven by the smaller markets. On a quarterly basis, the national rate of decline was at 1 per cent, with every capital city housing market recording a drop in value. The outcome highlights the broad geographic scope of this housing market downturn. Darwin (-3.6 per cent) and Perth (-2.1 per cent) recorded the largest falls, while Adelaide was the most resilient at -0.4 per cent.

Smaller markets are unlikely to gain any momentum over the coming months. Brisbane and Adelaide reported moderate falls in June of 0.6 per cent and 0.5 per cent respectively. Canberra falls were on par with Darwin at -0.9 per cent, while Perth dropped 0.7 per cent last month.

Hobart was the only capital outside of Sydney and Melbourne to experience any value growth, up 0.2 per cent for June despite the market coming off the heat. Tasmania’s regions have proven to be some of the country’s top performers, with the South East and West and North West areas growing 7.7 per cent and 6.4 per cent respectively.

On a regional level, Sydney’s aerial cities showed a significant drop in values over the past year, with conditions in markets such as Newcastle, Illawarra and the Southern Highlands and Shoalhaven all falling between 7.6 per cent and 10.7 per cent. Mr Lawless said these regions would be ones to watch to see if the improvements in the capital ripple out into the smaller markets.

Regional Victoria remains a solid housing market performer, with four of the top ten highest capital gains located in this region, including Sheppearton, Ballarat and Bendigo.

Housing markets in the outback regions of Queensland, Western Australia and South Australia continue to struggle on the back of extreme weather conditions, again recording the country’s worst results for the year to date, but conditions have improved a little.

National rent prices have held steady in June but tracked 0.3 per cent higher over the quarter and 0.4 over the financial year.