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No surprises as new Domain report highlights Sydney’s struggles, Hobart’s rise

No surprises as new Domain report highlights Sydney’s struggles, Hobart’s rise

Hobart's rise, Sydney struggle, Domain report
by Sasha Karen 0 comments

Domain has released its State of the Market Report – Metro for the quarter, which takes a deep dive into the current state of the country’s capital city property markets. Unsurprisingly, it shows that Sydney is struggling still, despite a slight reprise. On the other side of Bass Strait, Hobart is setting new records.

Overall, the report shows that the national median house price rose by 1.4 per cent over the December quarter to $813,024, while the annual growth was 5 per cent, its lowest point in 15 months.

National median unit prices rose slightly by 0.3 per cent over the quarter to $557,794, and much like the houses, the unit growth rate recorded 2.3 per cent, another 15-year low.

“A varied level of price growth across all capital cities was reflected in both the national median house and unit prices this quarter,” said Domain data scientist Dr Nicola Powell.

“Overall, prices rose marginally in the three months to December, but the slower pace has weighed down the annual growth to its lowest rate since September 2016.”

Here’s a quick breakdown of how each of the capital cities are progressing, according to the report:

Sydney – declining

Median house price: Up by 0.5 per cent over the quarter, up by 4 per cent over the year to $1,179,519.

Median unit price: Down by 0.4 per cent over the quarter, up by 1.7 per cent over the year to $736,879.

According to the report, weakening investor activity due to tight lending conditions is continuing to hinder property growth in Sydney.

“House prices in the Harbour City continue to moderate in line with an investor activity slowdown, and first home buyer participation rates are at their highest level in six years as entry-level buyers respond to state government incentives,” Dr Powell said.

“Sydney’s double-digit growth phase appears to be in the rear-view mirror, and with no further rate cuts in sight, the market may continue to moderate in 2018.

“Demand is likely to weaken, as the heightened investor activity that Sydney has experienced is unlikely to be significantly offset by the rising number of first home buyers.”

Melbourne – rising

Median house price: Up by 3.2 per cent over the quarter, up by 11.3 per cent over the year to $903,859.

Median unit price: Up by 2.8 per cent over the quarter, up by 8 per cent over the year to $506,079.

Dr Powell said that while investor activity declines due to the current tight lending environment, the potential for future price growth is unknown at this point.

“However, steady population increases and government incentives may support ongoing demand as the year unfolds,” Dr Powell said.

“Similar to Sydney, first home buyer numbers in Melbourne have risen, recording its highest level of activity since 2009. This can be attributed largely to the Victorian government’s entry-level buyer incentives.

“In the coming months, we are likely to continue to see a higher demand for entry-level homes, helping to drive price growth at the lower end of the market as well as support regional price movements throughout the state.”

Brisbane – declining

Median house price: Down by 0.6 per cent over the quarter, up by 0.4 per cent over the year to $548,918.

Median unit price: Down by 2.2 per cent over the quarter, down by 4.5 per cent over the year to $385,955.

According to Dr Powell, the increase of new apartments is staying ahead of current demand which, alongside population increases and declining new development starts and completions, could bring balance to the market.

“Brisbane offers a large inventory of houses and units that fall under $500,000, and interstate migration has fuelled the Brisbane market over the past two years as out-of-state buyers head to the Sunshine State in search of a lower price point,” Dr Powell said.

Adelaide – rising

Median house price: Up by 0.9 per cent over the quarter, up by 3.5 per cent over the year to $552,815.

Median unit price: Down by 1.6 per cent over the quarter, up by 2 per cent over the year to $315,794.

“Adelaide has avoided the extreme price surges impacting Australia’s east coast markets. Its steady pace of growth and diverse coastal lifestyle make it a reliable location for buyers heading into 2018,” the data scientist said.

Perth – declining

Median house price: Up by 0.5 per cent over the quarter, down by 2.5 per cent over the year to $557,567.

Median unit price: Up by 1 per cent over the quarter, down by 1.7 per cent over the year to $369,402.

Coming off months of declines, Dr Powell said that the market is finally starting to show signs of growth.

“The annual pace of decline in Perth house prices has slowed compared to the steeper falls recorded in 2016, and the annual unit price decline is at its lowest in almost three years.

“Perth’s housing market outlook for 2018 depends largely on whether the city’s economy and population track upwards throughout the year.”

Canberra – rising

Median house price: Up by 5 per cent over the quarter, up by 8.4 per cent over the year to $753,516.

Median unit price: Up by 0.1 per cent over the quarter, up by 0.4 per cent over the year to $426,124.

The second best-performing city this quarter, Canberra has been having a rising median house price for 15 months in a row.

“Renewed buyer and seller confidence has provided the nation’s capital with a substantial price boost that will likely continue throughout 2018,” Dr Powell said.

“Housing finance, retail trade and strengthening business confidence has been key to driving the ACT economy, in addition to spikes in tourism, infrastructure and capital initiatives [that] stimulated business, contributing positively to the economy.”

Darwin – declining

Median house price: Down by 2.6 per cent over the quarter, down by 7.4 per cent over the year to $565,696.

Median unit price: Up by 9.3 per cent over the quarter, down by 14 per cent over the year to $395,279.

The only capital city to record declines for median prices over the quarter and the year, the Darwin market had to rely mainly on the territory economy this year.

According to the data scientist, “despite the recent uptick in prices, annual trends in Darwin’s unit market are still on double-digit decline”.

“The oversupply of unit stock in the city is impacting the market, and price drops have been a consistent trend for Darwin since December 2016,” Dr Powell said.

Hobart – rising

Median house price: Up by 10 per cent over the quarter, up by 17.3 per cent over the year to $443,521.

Median unit price: Down by 0.8 per cent over the quarter, up by 14.2 per cent over the year to $318,467.

Hobart was the highest-performing capital city this quarter, with Dr Powell highlighting that the house price rise has not been this high in over a decade.

“Despite the surges in price,” Dr Powell said, “Hobart still has the lowest median house price of all the Australian capital cities, and it remains a great option for buyers seeking an urban lifestyle with an affordable point of entry.”

No surprises as new Domain report highlights Sydney’s struggles, Hobart’s rise
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