Home values just keep on rising
Despite an alleged peak in home building having passed and a cooling in growth, there is still a lot of positivity to be found in the Australian residential property market this spring, with aggregate home values rising all across the nation this October.
Capitals keeping on
The RP Data CoreLogic Home Value Index for last month has been released, and it shows more of the surging growth one has come to expect from Sydney and Melbourne. Month-on-month, these two capitals saw property values rise by 1.3 per cent and 1.9 per cent, respectively. This is continued good news for investors who have bought up the central city apartment markets in droves.
Despite the overall rise in values on an aggregate level, there was actually only one other state capital to see home values rise last month - Brisbane, with a modest 0.6 per cent growth figure.
Tim Lawless of RP Data says this indicates much stronger markets in the larger capitals - these three cities and Adelaide are the only four capitals to have positive value changes in the last three months, but have still driven a 2.2 per cent rise across all dwellings.
This suggests that for investment property that focuses on value growth rather than rental yield, the capital city markets are the way to go.
This is backed up by the CoreLogic Index rental yield figures for October. Melbourne, one of the two strongest cities for overall property value growth, has recorded the lowest yields at 3.2 per cent for houses and 4.1 per cent for units.
For those interested in high rent revenue, the Northern Territory is the place to invest - Darwin has the highest rental yields for both homes and units, at 5.9 per cent and 6 per cent respectively.
Further growth for apartments?
While there are still strong options for property investment, the Housing Industry Association (HIA) has noted that the home building peak appears to have passed, with seasonally adjusted October approvals for multi-unit dwellings falling significantly compared to both September and the same period last year. HIA Senior Economist Shane Garrett has called for more policy solutions to increase housing supply, which would allow more people to buy into homes.
However, Master Builders Australia Chief Economist Peter Jones stated that apartment approvals usually have a longer lead-in time, and they expect to see these numbers bounce back soon.