Broker News

Home prices surge

By CommSec

  • Home prices: The CoreLogic Home Value Index of capital city home surged by 1.4 per cent in December and was up 10.9 per cent over the year. Prices rose in five of the eight capital cities. Regional prices rose by 1.1 per cent in November.

What does it all mean?

The housing sector certainly seems to have finished off 2016 with a bang. Home prices surged by 1.4 per cent in December. But it was more encouraging to see that the lift in home prices was more uniform across the capital cities, and even regional house prices recorded a healthy lift. No doubt the improvement in economic conditions and low interest rates continues to fuel the interest in property.

Resource states noted a decent lift in prices over December. And looking forward the lift in commodity prices may mean that the mining towns have come through the worst of the downturn.

Overall policymakers will keep a close eye on the housing sector the early part of 2017, and will prefer to see more balanced house price growth across the nation. And in particular a further lift in regional house prices would be a positive outcome. Annual growth in home prices across regional centres is still just 2.8 per cent.

What do the figures show?

Home prices

  • The CoreLogic Home Value Index of capital city home prices surged by 1.4 per cent in December and was up 10.9 per cent over the year.
  • In regional Australia, house prices rose by 1.1 per cent in November and were just 2.8 per cent higher than a year ago. (Regional prices cover just houses and data is up to the end of November).
  • In capital cities, house prices rose by 1.4 per cent in December while apartment prices fell by 0.3 per cent. House prices were up 11.6 per cent on a year ago and apartments were up by 5.9 per cent.
  • The average Australian capital city house price (median price based on settled sales over quarter) was $650,000 and the average unit price was $536,000.
  • Dwelling prices rose in five of the eight capital cities in December: Hobart (up 3.3 per cent), Melbourne (up 3.1 per cent), Perth (up 1.4 per cent), Sydney (up 0.9 per cent), and Brisbane (up 0.6 per cent). Prices fell in Adelaide (down 2.0 per cent), followed by Canberra (down 0.3 per cent) and Darwin (down 0.1 per cent).
  • Home prices were higher than a year ago in seven of the eight capital cities. Prices rose most in Sydney (up 15.5 per cent); followed by Melbourne (up 13.7 per cent), Hobart (up 11.2 per cent); Canberra (up 9.3 per cent); Adelaide (up 4.2 per cent), Brisbane (up 3.6 per cent) and Darwin (up 0.9 per cent). Prices fell in Perth (down by 4.3 per cent).
  • Total returns on capital city dwellings rose by 14.7 per cent in calendar year 2016 with houses up 15.3 per cent on a year earlier and units up 10.4 per cent.

What is the importance of the economic data?

CoreLogic Hedonic Australian Home Value Index is based on Australia’s biggest property database. Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the CoreLogic Hedonic Index includes all properties. Home prices are an important driver of wealth and spending.

What are the implications for interest rates and investors?

If home prices lift too quickly policymakers will once again raise concerns about the need for a further tightening in lending standards.

Published on: Tuesday, January 10, 2017

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