Over the past 20 financial years there have only been two years in which combined capital city dwelling values have fallen.

Over the last financial year, combined capital city dwelling values increased by 9.6% which was actually greater than the 8.3% rise over the 2015-16 financial year.  Combined capital city dwelling values have now increased over five successive financial years however, prior to these increases there were successive financial years in which values fell (-1.4% in 2010-11 and -3.6% in 2011-12).  Across the individual capital cities the growth story over recent financial years has been vastly different.

Sydney

Dwelling values increased by 12.2% over the past year and it was the fifth successive year in which values rose.  Value growth was slightly higher than the 11.3% over the previous financial year.

Melbourne

Values have now increased for five successive financial years with each of those years progressively seeing a faster rate of value growth.  Over the past year, values increased by 13.7% which was their greatest increase over a financial year since 2009-10.

Brisbane

A 2.0% increase in values over the past financial year was down on the 5.3% the previous year.  Brisbane values have increased over each of the past five years however, last year was the slowest rate of growth since 2012-13.

Adelaide

The 2.4% rise in values over the past year eclipsed the 2.1% increase the previous year and marked the fifth consecutive financial year in which values increased.

Perth

Dwelling values have fallen over each of the past three financial years however, the rate of decline has slowed from -4.7% in 2015-16 to -1.3% in 2016-17.  At no other time over the past 20 years have values fallen over three successive financial years in Perth.

Hobart

The 6.8% increase in dwelling values over the past financial year was the greatest increase in values over a financial year since they rose by 8.5% in 2005-06.

Darwin

Dwelling values have fallen for three successive financial years. The -7.0% fall in values over the year was the largest annual decline since values fell by -12.6% over the 2010-11 financial year.

Canberra

Values rose by 9.6% over the last financial year which was the greatest rise in values over a financial year since 2009-10 when values increased by 13.3%.

In most capital cities, the rate of value growth over the past financial year was superior to that over the previous year. The exceptions were Brisbane and Darwin. A number of cities recorded their greatest increases in values in a number of years highlighting that the rate of growth has been accelerating.

Two of the primary factors influencing the rebound in capital gains during the most recent financial year was the rebound in investment activity after 2015/16 saw investment activity slow on the back of changed prudential policies implemented by APRA as well as successive rate cuts in May and August last year that added further incentive to property buyers. 

With a new round of macroprudential policies announced at the end of March this year, its likely there will be a similar, if not more pronounced slowdown in investment activity across the housing market. Coupled with affordability constraints and higher mortgage rates, we expect the 2017/18 financial year will record a less substantial rate of capital gains that what was seen in 2016/17.

Cameron Kusher
Head of Research CoreLogic