It’s been a tale of two halves when it comes to capital city property price growth, with the latest data showing Brisbane and Adelaide continuing to rise while Melbourne housing values have started falling.
The CoreLogic Hedonic Home Value Index showed Australian housing values rose one per cent in December, slowing from a 1.3 per cent climb in November.
The softening trend in the monthly growth rate, which hit a cyclical high of 2.8 per cent in March 2021, means conditions are diversifying across the capital cities and regional Australia.
Brisbane, Adelaide and regional Queensland are the only regions where there is no evidence of value growth slowing just yet.
In December 2021, Brisbane recorded a 2.9 per cent jump in housing values, while in Adelaide they rose 2.6 per cent month-on-month.
Brisbane now has a median dwelling value of $683,552, while Adelaide’s is $569,882.
CoreLogic Research Director Tim Lawless said these regions had less of an affordability challenge than larger capitals and strong interstate migration.
“Additionally, we haven’t seen the same level of supply response seen in other regions, with the trend in advertised supply remaining well below average,” he said.
In comparison, housing values fell 0.1 per cent in Melbourne in the last month of 2021, while Sydney only recorded a 0.3 per cent rise.
Sydney’s median dwelling value is now $1.098 million, while Melbourne’s sits at $795,108.
Mr Lawless said Melbourne and Sydney recorded the softest monthly reading in housing values since October 2020.
“A surge in freshly advertised listings through December has been a key factor in taking some heat out of the Melbourne and Sydney housing markets, along with some demand headwinds caused by significant affordability constraints and negative interstate migration,” Mr Lawless said.
Housing values across regional Australia rose 2.2 per cent in December 2021, which was the highest in nine months.
Since March 2020, housing values across regional Australia have soared 32 per cent, compared to the 20 per cent jump across the combined capitals.
Mr Lawless said regional Queensland was the clear standout in December, with housing values climbing 2.4 per cent.
However, over the year the strongest regional markets have been in NSW (29.8 per cent) and Tasmania (29.5 per cent)
“The most popular regional markets have seen housing values rise more than 30 per cent over the calendar year, with the Southern Highlands and Shoalhaven recording the highest annual rise in home values at 37.7 per cent, followed by Queensland’s Sunshine coast at 33.7 per cent,” Mr Lawless said.
Tight stock levels that have been a feature of the property market throughout the pandemic and advertised inventory finished the year 24.7 per cent below the five-year average.
But total listings started to rise in the December quarter, with the number of new listings added to the market in the final month of 2021 up 21.4 per cent on the five-year average.
Listing trends varied from city to city, with Melbourne the only one to finish 2021 with stock levels above the five-year average.
Sydney listings were just 3.9 per cent below average and in Brisbane and Adelaide the advertised supply is about 35 per cent below the five-year average.
“The number of homes available to purchase has been a key factor underlying the trend in housing values. Cities where advertised stock levels are above average or close to normal, such as Melbourne and Sydney, have shown a more obvious slow down relative to cities with persistently low advertised supply, like Brisbane and Adelaide,” Mr Lawless said.
Dwelling rents rose 9.4 per cent in 2021, with unitys up 7.5 per cent and housing rents climbing 10.1 per cent across the year.
The unit sector recorded milder growth than houses as it was disproportionately affected by stalled overseas migration and domestic rental preferences moved away from high density options due to the pandemic.
“In Melbourne, where unit rents fell by 8.5 per cent between March 2020 and May 2021, higher density rental markets are now recording a faster rate of growth than houses, with Melbourne unit rents recording a 1.6 per cent quarterly increase compared to the 0.9 per cent rise seen in house rents,” Mr Lawless said.
The tightest capital city rental market over the year has been Darwin, where dwelling rents rose 15.2 per cent.
Rental yields have trended lower as a result of rising property prices.
With national housing values recording an annual rise of 22.1 per cent compared with a 9.4 per cent rise in rents, rental yields have decreased as a natural consequence.
“Gross rental yields fell to a new record low across Australia, reaching 3.2 per cent in December,” Mr Lawless said.
“The lowest yields, by some margin, remain in Sydney (2.4 per cent) and Melbourne (2.7 per cent), however, with the exception of Perth and Darwin, every capital city is recording record low yields.”
In New Zealand, property values rose 1.9 per cent in December, up slightly from November’s 1.8 per cent climb.
The December reading closes out a record year for the Aotearoa property market, with 27.6 per cent growth over the full calendar year exceeding the previous record of 24.4 per cent growth witnessed in 2003.
CoreLogic’s House Price Index shows the average value of a New Zealand home has topped $1 million for the first time and sits at $1,006,632.
CoreLogic NZ Head of Research Nick Goodall said 2021 was a “remarkable year” with low interest rates and most borrowers’ ability to secure finance fueling strong demand.
But he said changes to the Credit Contract and Consumer Finance Act (CCCFA) at the start of December 2021, which brings greater scrutiny of a potential borrower’s expenses and ability to repay their loan, had seen the market tighten.
“While the changes clearly haven’t impacted all borrowers immediately, with values still rising at above average rates, they are likely to be felt more widely throughout 2022 as rising interest rates and diminishing affordability combine to reduce borrowing capacity,” Mr Goodall said.
Mr Goodall said while monthly property values had risen, the rate of annual growth dropped for the second consecutive month after October’s peak of 28.8 per cent.
In Tauranga the annual growth rate slowed from 35.8 per cent at the end of November to 30 per cent at the end of December, while in Wellington it fell from 33.5 per cent to 30.6 per cent.
The annual growth rate also fell in Auckland, slowing from 25.7 per cent in November to 24.9 per cent in December.
Christchurch continued to record strong monthly growth, at 3.5 per cent in December, which takes its annual growth rate to 38 per cent.
Property value growth in Queenstown hit a hurdle in December, falling 1.2 per cent and dropping the average property value back to $1.568 million.
Rotorua recorded the biggest leap in December, with property values now 4.7 per cent higher than they were in November, at $703,990.
Further growth in both Lower Hutt (0.6 per cent in December) and Porirua (1.6 per cent) has seen the average property value in both cities tick over $1million.
Nearby Kapiti Coast is also approaching this figure (currently $984,511) after 1.1 per cent growth in December.