Market/Finance News: Cooling capital city values highlight first buyer opportunity

By the resi financial blog team, 05 May 2014

First home buying opportunities in capital cities

The explosive growth seen across Australia's capital cities is beginning to slow down, with the latest RP Data-Rismark Hedonic Home Value Index for April highlighting a general cooling of the property market across the nation's metropolitan centres. This could present a number of opportunities for first home buyers to purchase property across the nation over the coming months, as homes won't become exceedingly expensive. 

According to the report, dwelling values across the capital cities during April rose by just 0.3 per cent. This is significantly less than the 2.3 per cent rise seen in March, or the 3.5 per cent overall increase experienced during the first quarter of 2014. Adelaide experienced the largest growth in April, rising by 2.1 per cent over the month.

Following this, both Brisbane and Darwin saw value rise by 1.1 per cent as well. Sydney (0.5 per cent), Perth and Hobart (0.2 per cent) saw significantly reduced capital growth as well. With these levels of growth maintaining the market at a slower, more sustainable level, first home buyers could be more comfortable entering the market. 

RP Data Economist Tim Lawless said these figures were good news, especially following discussions within the industry about the explosive rate of growth being experienced and how unsustainable those levels were in the long term. 

"The reduction in the rate of capital gains across the combined capital cities housing market brings growth back into a more sustainable range and will be a welcome relief for first home buyers," said Mr Lawless in a May 1 statement. 

"A lower rate of capital gains in Sydney and Melbourne where dwelling values surged 22.5 per cent and 16.4 per cent respectively over the current growth cycle, may now signal that these markets are moving through their growth cycle peak." 

Furthermore, Rismark Chief Executive Officer Ben Skilbeck said Sydney's real estate market was currently resting at the lowest rate of monthly growth since the beginning of the city's 11-month stint of consecutive increases. 

"The last time Sydney strung together 11 consecutive month-end increases was in November 2007 when the market added 14.7 per cent and before that in November 2002 when it delivered 19.6 per cent growth. The record for Sydney consecutive growth months was 12 recorded in November 1996," said Mr Skilbeck in a May 1 statement. 

First home buyers looking to secure property in the coming months should investigate competitive home loans in order to take advantage of the current market situation. 

Categories: Home Loans, Personal Finance