Core Logic has released their newest housing market update for May 2017.
In the below overview we have included a summary of Core Logic’s overall analysis of the property market.
We’ve also included their Melbourne housing market video below along with a transcript.
Australian Housing Market Overview
Corelogic’s latest data has seen a month of cooling in investor capital gains and it has some investors worried.
While across Australia we saw capital gains slipping, Melbourne returned a gain at 0.5% in city dwelling values. That’s 15.3% higher over the past year, which suggests the assets in this highly sought after city are still looking promising for property investors.
The concerns are that this slowdown will lead to a downward spiral in the market and because of the current sensitivity of rental yields in Australia’s best performing cities – namely Melbourne and Sydney – this could result in a big hit for investors.
Furthermore, a rather large gap has formed between how houses are performing compared to units in Melbourne. The disparity between the two is only growing year on year – house values have seen a rise of 16.5% in the past 12 months while units have only seen a 4.1% increase in growth.
This by no means suggests that the Melbourne property bubble has finally burst. With a rebound in weekly rents, we’re seeing a rise of 4% each year for both houses and units in Melbourne.
With capital gains across the unit sector now below 4% per annum, there’s actually been a slight improvement in the gross yield for Melbourne units rising from 4% to 4.1% over the month of April.
But despite rental yields shifting higher, yields in Melbourne still remain at record lows.
With 46% of new mortgages in Victoria coming from investors, a slowdown in investment activity could impact the Melbourne market drastically.
While this slowdown may be raising alarm bells for property investors nationwide, this data is simply a snapshot of the larger picture and only time will tell where the market is headed next.
Melbourne Housing Market
The below analysis is a transcript taken from the above video. Start time: 3:22 – 4:08
Melbourne’s markets saw a further rise in dwelling values of the month of April, rising by 0.5% over the month to be 15 point three percent higher over the past 12 months.
A substantial gap has opened up between the performance of houses and units with house values now sixteen point five percent higher over the year, while unit values are only up by four point one percent.
One of the more interesting developments in a Melbourne housing market has been a rebound in weekly rents. Rents are now rising in just over 4% per annum across both the house and unit sector.
With capital gains across the unit sector now below 4% per annum, there’s actually been a slight improvement in the gross yield for Melbourne units rising from 4% to 4.1% over April.
While the yield may have shifted a bit higher, yields in Melbourne remain close to record lows.