Capital city values record strong capital growth over winter

By the resi financial blog team, 08 September 2014

Capital city values record strong capital growth over winter

The growth of capital city values over the cool winter months has been significant, with the strongest level of capital gains over the winter period since 2007. In fact, dwelling values across all capital cities rose by 4.2 per cent over the three-month winter period - with no sign of slowing down.

Now could be a great time to consider taking out an investment loan in these metropolitan regions, especially with the spring selling season just starting to begin.

Capital city growth was fuelled by dramatic increases in Melbourne and Sydney, which saw values grow by 6.4 per cent and 5 per cent, respectively. This represents a 16.2 per cent increase in value for properties in Sydney over the last 12 months and has pushed the median dwelling price to $650,000 across the New South Wales capital. Furthermore, Melbourne recorded a 11.7 per cent growth over the last year, with the current median dwelling price resting at $523,750.

These growth figures highlight the rising strength of the nation's property market, which is being spurred on by a rising buyer confidence mixed with a steady growth in residential construction completions. RP Data Research Director Tim Lawless said the current growth cycle has seen Sydney dwelling values rise by 27.2 per cent, with Melbourne trailing closely behind with a rise of 19.5 per cent. 

"Since the beginning of 2009, we have seen values rise by a cumulative 50.1 per cent and 46.1 per cent respectively in Sydney and Melbourne," said Mr Lawless in a September 1 statement, highlighting that Perth's values also grew by 15 per cent over this period. 

"With today marking the first day of Spring, we are expecting listings numbers to rise over the coming month which will provide a real test for the housing market. Considering the ongoing high rate of auction clearance rates, a generally rapid rate of sale and the ongoing low interest rate environment, it's likely that dwelling values rise even further over the next three months." 

He went on to say that investors are fast becoming one of the larger market shares in regards to home loans, as new investor mortgage commitments now accounting for more than 38 per cent of lending for nine consecutive months - the longest period investment has ever been retained at this level. 

"Investors are mostly concentrated across the Sydney and Melbourne apartment markets where capital gains have been strong but yields have been pushed very low. Potentially there are better investment returns to be had in the smaller capital cities where the growth trend is less mature and yields are also healthier," said Mr Lawless. 

Now could be the perfect time to consider looking into your home loan options across the nation and begin making moves to secure your own pieces of Australian property over the coming months. 

Categories: Home Loans, Personal Finance, Property Investment