Modest rise for Canberra home values: CoreLogic RP report

Canberra recorded a modest growth in home values in April, according to CoreLogic RP’s monthly snapshot of of Australian residential property.

The Core Logic RP Data April Home Value Index, published on Monday, showed that Canberra dwelling values rose 1.2 per cent over the past month.

It was an improvement on last month’s 0.8 per cent drop, but it fell short of the combined capital cities’ average growth of 1.7 per cent.

CoreLogic RP Data research director Tim Lawless said housing trends were mixed across the country, however every capital city, with the exception of Perth, recorded a lift in dwelling values across the calendar year to date.

Canberra recorded a 0.3 per cent rise in dwelling values during the first quarter, compared to the national capital city average of 2.4 per cent.

“The results show value growth moved at a faster pace compared with the final three months of 2015 when capital city dwelling values slid 1.4 per cent lower off the back of weaker market conditions in Sydney and Melbourne,” Mr Lawless said.

Canberra recorded year-on-year growth of 4.5 per cent – the fourth-strongest performing capital city after Melbourne, Sydney and Brisbane.

Melbourne recorded the strongest year-on-year result with home values rising 10.1 per cent.

Canberra remained the third most expensive city in which to buy property, recording a median dwelling price of $540,000.

Sydney and Melbourne topped the list with median home prices of $780,000 and $585,000 respectively.

Canberra’s gross rental yields remained steady at 4.1 per cent for houses and 5 per cent for units.

The capital city average of gross rental yields was 3.4 per cent – a 0.2 per cent decline compared with a year ago.

Mr Lawless said the fact that dwelling rents were broadly flat, while home values continued to rise pushed rental yields lower across the country.

Sydney and Melbourne recorded a house gross rental yield of 3.1 and 2.9 per cent respectively.

“The low yield profile across Australia’s two largest cities, which are also the cities that attract the largest investment demand, suggests that most recent investors, despite the low mortgage rate settings, are likely to be utilising a negative gearing strategy to offset their cash flow losses against their taxable income,” Mr Lawless said.

Mr Lawless said investors comprise about 46 per cent of all new mortgage commitments across the country and he expected investor demand for housing would remain strong.

“As long as taxation policy continues to support investment in the housing market, we are likely to see investors remain as a substantial component of housing demands due to the lacklustre returns evident in other asset classes such as cash, bonds and equity,” Mr Lawless said.