Sydney house prices slip as capital cities heat up

Photo credit: 8LettersUK

Sydney house prices slipped in the three months to February 2016, as growth in other capital cities continued to heat up.

Sydney has long been the hottest housing market in Australia, but growth has moderated in recent months and other cities have begun to play catch up.

On average, capital city property prices increased by 0.5 per cent in February, but the trend in annual growth has moderated over the past seven months from 11.1 per cent down to 7.6 per cent. Part of that dip is due to Sydney, which was the only capital city to record a fall in dwelling values over the past three months, down 0.2 per cent.

The city with the greatest value rise over the past three months was Hobart (8.5 per cent), ahead of Melbourne (3.8 per cent) and Brisbane (2 per cent).

On a monthly basis, home values rose across each capital city with the exclusion of Perth and Canberra. The largest monthly increases in home values were recorded in the cities that have been underperforming over the growth cycle to date; Hobart dwelling values were 2.9 per cent higher, Adelaide showed a 1.9 oer cent rise, and Brisbane home values increased by 1.8 per cent.

Overall, Sydney and Melbourne remain the strongest markets in trend terms, although the gap is widening between the two, as Melbourne starts to move ahead.

Indeed, over the past 12 months, Melbourne has maintained its number one growth position, with annual capital gains of 11.1 per cent. The city's values have held relatively firm since December 2015, with the annual rate of capital gain "virtually level over the past three months".

Sydney's annual rate of growth, on the other hand, has continued to moderate, having almost halved from its cyclical peak of 18.4 per cent recorded in July last year to reach 9.5 per cent growth over the past 12 months. Despite the slowing trend, Sydney remains the second best performing capital city over the past year, although Lawless notes that a few of the smaller cities "may start to rival Sydney’s position over the coming months".