CoreLogic’s June housing market review reveals Brisbane dwelling values continued the sustainable, but moderate pace of growth. Despite the seasonal weakening, the popularity of the real estate market remains at a high level
Further conclusions can be made only as a result of monitoring the subsequent development of the market.
We’ve included the Brisbane property market video, along with the transcript below.
Welcome to Core Logic’s Brisbane property market update for June 2017
In Brisbane dwelling values continued the sustainable bid moderate pace of growth tracking 1.2 percent higher over the three months ending May 2017 to be two point three percent higher over the year.
Like many cities, the growth in dwelling values is mostly attributable to the detached housing sector. House values are 1.5 percent higher over the rolling quarter and 2.3 percent higher over the 12 months, while unit values have slipped 1.7 percent lower over the rolling quarter, to be down for a half percent year on year, which is the largest fall since 2012.
The last five years has seen Brisbane dwelling values increased by 21 percent with an annual growth rate of three point nine percent.
Overall negative May index
Overall the negative May index results from CoreLogic come to the time of seasonal weakness which may imply that calling a peak in the housing market is premature, but it’s becoming increasingly clear that some of the heat has left the Sydney marketplace and to a lesser extent Melbourne’s.
One of the key factors affecting housing market conditions is likely to be the fact that mortgage rates are pushing higher since August last year discounted variable rates have risen by 10 basis points for owner-occupiers and by 35 basis points for investors.
Mortgage rates could rise further as the recently announced macro-prudential measures from APRA progressively impact on credit policies and the federal government banking levy comes into effect on July 1st.
Small rises in mortgage rates are likely to have some impact on housing demand considering household debt is tracking record highs.
For investors, the high cost of servicing that comes at a time when rental yields are close to record lows in Sydney and Melbourne, which are also the two cities with the largest concentration of investors.
Landlords are likely to try pushing rent higher but this may be difficult considering the weak wages growth environment and the fact that rental supply is high in some regions.
While we are expecting investment activities are slow the fact is other asset classes aren’t likely to be as attractive as property to investors.
Cash and bonds continued to provide low bits safe returns and equities remain volatile.
Considering the alternatives, we’re likely to see property investment remain a popular option.
If investors are concerned about the run of capital gains in the two largest capital cities coming to an end, for student investors may start changing their focus towards the rental market return, given the possibility of lower capital growth potential.
Yields are much healthier in cities like Hobart, Brisbane and Canberra and the growth cycle is nowhere near as mature as what it is in Sidney and Melbourne.
In summary, the jury’s still out on whether the housing market has peaked. However, if it hasn’t, a peak could be just around the corner, the housing market remains as diverse as ever and the flow of data over the coming months will be a critical factor to get a better understanding of the trends.
Of course, you can stay in tune with regular housing market updates by the core logic website at www.corelogic.com.au