Capital gains continue in April

Capital gains continue in April

Posted on Friday, May 02 2014 at 10:28 AM

Dwelling values across Australia’s capital cities continued to rise in April – albeit at a more moderate pace in some areas – according to the RP Data-Rismark combined capital city index.

Dwelling values increased 0.3 per cent across all
capital cities according to the index.

The slowdown in the rate of capital growth comes after
a very strong 2.3 per cent month-on-month rise in March and 3.5 per cent
increase over the first quarter of the year.

Melbourne (down 0.5 per cent) and Canberra (down 1.1
per cent) values recorded a fall over the month while growth in dwelling values
across the other capital cities ranged from 0.2 per cent in Perth and Hobart to
2.1 per cent in Adelaide.

Every capital city recorded an increase over the past
three months with the largest capital gains being recorded in Darwin (5.1 per
cent) and Sydney (4.1 per cent).

Since the housing market moved out of its correction
phase at the end of May 2012, dwelling values across the combined capital city index
have increased by a cumulative 16.1 per cent through to the end of April 2014.

According to RP Data’s Tim Lawless, the strong market
conditions have sparked a new round of debate around the sustainability of
recent rates of housing value growth and the impact on affordability for
housing, particularly in Sydney and Melbourne.

“The reduction in the rate of capital gains across the
combined capital cities housing market brings growth back into a more
sustainable range and will be a welcome relief for first home buyers,” Lawless

“A lower rate of capital gains in Sydney and Melbourne
where dwelling values surged 22.5 per cent and 16.4 per cent respectively over
the current growth cycle, may now signal that these markets are moving through
their growth cycle peak. However, we will need to see a few more months of data
before we can establish whether a slowing trend is now evident in these cities.
We have recently seen auction clearance rates move lower in both of these

Sydney’s median house price has broken the $800,000
mark for the first time on record. The median house price in Sydney was
recorded at $802,000 over three months ending April 2014, likely reflecting the
increase in housing market activity at the more expensive end of Sydney’s
housing market. Sydney’s median house price is currently 30 per cent higher
than Melbourne and 68 per cent higher than Brisbane. 

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