Residential property price growth in Australian capital cities slowing

Taylor Scott International News

The pace of growth in residential property prices across Australia’s eight capital cities is slowing amid signs that sales momentum is waning, the latest data shows. In the March quarter of 2016 prices were 6.8% than 12 months previously, according to the figures from the Australian Bureau of Statistics (ABS). But this was slower than throughout 2015 when growth averaged 9% per annum. ‘This deceleration is largely being driven by developments in the Sydney residential property market, where annual price growth eased back into single figure territory in March this year. Sydney prices grew at an annual rate of 9.7%, beating the national average, but are also the city’s slowest pace of growth in almost three years,’ said Diwa Hopkins, Housing Industry Association economist. ‘This deceleration in price growth has occurred against a backdrop of waning momentum in property transfers, particularly amongst non-detached housing. The volume of attached dwelling transfers across Australia grew strongly in 2013 and 2014. The volume of transfers was virtually unchanged in 2015 and signs of a pullback in 2016 are now emerging,’ she explained. A breakdown of the figures shows that price growth remained strongest in Melbourne with an increase of 9.8%, followed by Sydney up 9.7%, then Canberra up 4.6, Hobart up 4.2%, Brisbane up 4.1% and Adelaide up 3.1%. In other capital cities prices growth has fallen, led by Darwin with a fall of 4.9% and in Perth prices fell by 4.5% in the year to the March 2016 quarter. Meanwhile, the HIA’s latest bi-annual Housing Scorecard shows that there were over 220,000 dwellings commenced in Australia during 2015, a new annual record. However, there were significant divergences in conditions for residential building around the country. The eastern seaboard states have been the strongest performers, the mining states are sliding down the order, while South Australia and Tasmania are facing the most challenging conditions, according to said HIA economist Geordan Murray. The report shows that there is little to separate the top two ranked states, but it is Victoria that has edged out New South Wales to take the top spot. With nearly 70,000 dwellings commenced in 2015, it is not all that surprising that Victoria was number one, but Victoria also ranked as the strongest market for renovations. Western Australia is off the pace of the top two states, but still ranks third. But Murray pointed out that the high ranking for Western Australia belies the challenging conditions emerging for residential building, as evidenced by nearly 18 months of falling home prices. ‘The state’s overall ranking is propped up by strong performances in indicators of residential building that is already underway. The leading indicators highlight the recent deterioration in conditions and the prospect of weaker conditions ahead, which the HIA has been warning of for a considerable time,’ he explained. He also explained that Queensland is not performing as strongly as Victoria and New South Wales, but the housing recovery is being tempered by the… Taylor Scott International

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