Australian Property Hits $6T

Melbourne and Sydney continued to set a rapid pace for capital gains in July, pushing the CoreLogic RP Data Home Value Index 2.8% higher over the month and 11.1% higher over the past year

The two tiered growth evident across Australia’s housing markets continued through July with Sydney and Melbourne continuing as the two capital cities driving home values higher. The growth, together with new stock additions to the market, was enough to push the aggregated national value of all dwellings past the $6 trillion mark.

According to Tim Lawless, CoreLogic RP Data’s head of research, the total aggregated value of Australian housing has increased by just over half a trillion dollars over the past twelve months.

Twelve months ago, CoreLogic RP Data estimated that the gross value of the total residential property asset class was $5.5 trillion. In July 2015 our estimates have now reached $6 trillion as a result of value growth and dwelling construction. Based on APRA data through to March, approximately $1.3 trillion of bank debt remains outstanding against the asset class. Taking into account housing debt from the non-bank sector as well suggests that the overall debt to valuation ratio across the national housing portfolio is likely to be around the mid 20 per cent mark."

Focusing on value growth, Melbourne traded places with Sydney over the past three months to record the highest rate of capital gain. Dwelling values in Melbourne surged 6.1 per cent higher over the three months ending July 31; the highest rolling quarterly rate of growth since the three months ending August last year when values grew 6.4 per cent over that period. According to Mr Lawless, growth in Sydney wasn’t quite as strong over the rolling quarter, recorded at 5.4 per cent, which is the highest rate of growth since the March quarter this year (5.8 per cent).

"To date, the capital cities have seen remarkable differences over the growth cycle which broadly commenced at the end of May 2012 and since that time dwelling values across our combined capitals index have increased by 30.4 per cent. Sydney values are 47.9 per cent higher over the current cycle and Melbourne values are 32.1 per cent higher while every other capital city has seen growth of less than 13 per cent over the same period. This highlights the extent to which the Sydney and Melbourne markets have outperformed other markets over the past three years.

"Over the past twelve months, we’ve seen several cities enter a correction phase with Darwin values falling the most, down by 5.3 per cent. Perth values also drifted lower over the year, down 0.3 per cent. At the same time, the annual rate of capital gain in Sydney reached a new cyclical high with dwelling values moving 18.4 per cent higher over the year; the highest annual rate of growth for Sydney since the twelve months ending December 2002.