Just when you thought property prices couldn’t increase any further, data from the latest CoreLogic Home Value index for February 2017 indicates that capital city home prices rose a further 1.4 per cent.
Over the past twelve months, prices across the capital cities are now 11.7 per cent higher.
The Sydney property market remains particularly heated, seeing a further 2.6 per cent growth during the month and reaching an annual growth rate of 18.4 per cent.
This means that if you purchased a property in Sydney before June 2012, it is now worth 75 per cent more than what it was purchased for.
The median dwelling price for properties in Sydney is currently $795,000, followed closely by Melbourne with a median dwelling price of $610,000.
Melbourne, Adelaide, Hobart and Canberra also experienced monthly increases in dwelling values during February. Meanwhile, only Brisbane, Perth and Darwin saw dwelling values fall.
Darwin was the capital city which saw the largest decrease in average dwelling values, falling by 4.3 per cent.
It appears that a lack of supply coupled with strong demand continue to be the main factors pushing property prices higher.
The latest data from SQM Research shows that there has been a fall in stock available on the market over the past year of 5.1 per cent nationally.
Of the capital cities, Hobart has seen the largest percentage fall. The number of residential listings available in the Tasmanian capital fell 13.4 per cent over the past year.
While Melbourne saw more properties hit the market than any other capital city around the country during January, with 5,423 properties listed during the month, SQM Research figures for the Victorian capital suggest the number of listings trended downwards over the past year.
Listings have fallen 9.7 per cent in Melbourne from 36,406 during February 2016 to 32,892 in February 2017.
While a fall in residential stock in Sydney is less pronounced, at just 0.7 per cent, it has been argued that the city needs more listings to lessen the pressure that is contributing to the recent price growth.
In 2016, units available for rent were up 9.3 per cent to 287,233 properties. However, the CoreLogic figures suggest that the areas which are seeing the biggest increase in rental vacancies are located in Western Australia, especially in Perth. This is due to a decrease in demand following the end of the mining boom.
There are some areas of Sydney such as Fairfield, Hornsby, the Hills Shire and
Kur-ring-gai which reflect that investors have been actively purchasing in these areas and these properties are now becoming available for rent.
Despite the annual increase, the latest figures from SQM Research indicate that there has been a fall in the national vacancy rate from 2.8 per cent in December 2016 to just 2.4 per cent during January 2017.
According to the SQM Research data, both Sydney and Melbourne saw falls in vacancies during January. Sydney went from 2.4 per cent in December to 2.0 per cent in January, whilst Melbourne went from 2.5 per cent in December to 2.0 per cent.
Of the capital cities, Perth had the highest vacancy rate during January at 4.8 per cent.
Auction clearance rates
This was up on the 74.6 per cent clearance rate from the previous week and 64.9 per cent achieved during the same week one year earlier.
Of the capital cities, Adelaide experienced the highest clearance rate at 87 per cent from just eighty two auctions reported. This was followed by Melbourne with an 84.3 per cent clearance rate from 355 total auctions and Sydney with an 83.1 per cent clearance rate from 766 total auctions.
Canberra also performed strongly, registering a preliminary clearance rate of 83.3 per cent.
One of the reasons driving high clearance rates is due to four of the eight states having a public holiday, which has meant a fall in auction volumes over the week.
The Northern Territory capital saw a fall in asking rents for units of 2.5 per cent during January and 0.1 per cent for houses.
Meanwhile Perth has had the largest yearly decline of 7.6 per cent for houses to $435.50 per week and 10.8 per cent for units to $337.20 per week. However there was a slight improvement in weekly house rents, increasing 2 per cent in the week ending the 20th of February when compared with the previous week and up 0.5 per cent when compared to the previous month.
Adelaide and Hobart remain the cheapest cities in which to rent. Houses in Adelaide currently rent at an average of $370.50 per week and units at $289.70 per week whilst houses in Hobart rent at $352.20 per week and units at $306.10 per week.
Despite this, the latest figures from the Australian Bureau of Statistics show that while the number of new buildings approved across the country increased slightly in January, it was lower than at the same time a year ago.
The number of new dwellings approved in seasonally adjusted terms rose 1.8 per cent from 17,327 reported in December 2016 to 17,412 in January 2017.
Over the past twelve months there has been a 12 per cent decline in the total number of dwellings approved in seasonally adjusted terms.
Finance and interest rates
Despite the decision, investors have been forewarned that many mortgage lenders and banks will continue to increase interest rates out-of-cycle and to budget accordingly.
Those looking to invest in property should also be prepared for further tightening of borrowing requirements. During February, both the Commonwealth Bank and its subsidiary, Bankwest clamped down on property investor loans.
The Commonwealth Bank advised it will be turning away property investor customers of rival banks wanting to refinance their loans, whilst Bankwest confirmed that property investors will no longer be able to include the benefits of negative gearing when applying for a home loan at the institution.
Mortgage Choice Chief Executive John Flavell has advised those who have existing mortgages to review their current loans to ensure it still meets their needs and to budget between 2 to 3 per cent on top of their current repayments to avoid any possible rate shock.