Decline

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<p><span>Is new supply of apartment catching up with demand?</span></p>
<p><span>Decline in unit values was the most marked price trend in May, according to CoreLogic RP Data.</span></p>
<p><span>There was a 2.8% decline in May for Sydney apartments to a $648,000 median and a 2.5% decline for Melbourne apartments to a $480,000 median.</span></p>
<p><span>Melbourne house values are now 9.8% higher over the year compared with a 2.9% rise in unit values.</span></p>
<p><span>Every other capital city is seeing a similar, though not as marked, trend with the capital gain for houses recorded at a higher rate compared with the unit market.</span></p>
<p><span>“The higher supply levels are likely to be a primary reason why unit values are rising at a much slower pace than house values in Sydney and Melbourne," according to CoreLogic RP Data head of research, Tim Lawless.</span></p>
<p><span>"The pace of growth in unit values across Sydney is about half that being recorded across the detached housing sector, with house values up 16.4% (to $880,000) over the year compared with an 8.8% rise in unit values.” Melbourne house median sits at $620,200.</span></p>
<p><span>Overall dwelling price growth stalled in May with national dwelling values down 0.9% over the month, Tim Lawless said.</span></p>
<p><span>But the weaker reading across the May results is likely to be short-lived, he says, noting the May indices results marked the three year anniversary for the current growth cycle which commenced at the end of May 2012.</span></p>
<p><span>Since that time, Mr Lawless noted that capital city dwelling values have increased by 24.2% with Sydney values rising a significant 39.3 per cent since values bottomed out in May 2012.</span></p>
<p><span>Melbourne dwelling values have seen the second highest rate of growth over the current cycle, increasing by 22.4% while in Darwin, values are 18.3% higher.</span></p>
<p><span>Perth values are up 13.2% followed by Brisbane at 10.6%, Adelaide at 9.9%, Canberra with a growth rate of 8.3% over the cycle, and Hobart where values are 7.7% higher over the cycle to date.</span></p>
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<p><a href="/images/2015/06/01/dwelling.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span> </span></p>
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<p><span>Highlights over the three months to May 2015</span></p>
<ul>
<li><span>Best performing capital city: Sydney +3.3% </span></li>
<li><span>Weakest performing capital city: Hobart -0.9% </span></li>
<li><span>Highest rental yields: Darwin houses with gross rental yield of 5.6% and Darwin Units at 5.8%</span></li>
<li><span>Lowest rental yields: Melbourne houses with gross rental yield of 3.2% and Melbourne units at 4.3%</span></li>
<li><span>Most expensive city: Sydney with a median dwelling price of $752,000</span></li>
<li><span>Most affordable city: Hobart with a median dwelling price of $328,000</span></li>
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<p> </p>
<p><span>Capital city rental yields remained steady over the month with the typical capital city rental dwelling attracting a gross yield of 3.7%, however yields have compressed substantially over the growth cycle to date.</span></p>
<p><span>“Over the past three years, dwelling values have risen more than three times as fast as rents," Tim Lawless said.</span></p>
<p><span>"Dwelling values are 24.2%higher across the combined capitals over the past three years while weekly rents have risen by only 7.2%.</span></p>
<p><span>"The net result is that gross rental yields have been compressed from 4.3% back in 2012 to the current average gross yield of 3.7% across the combined capital city index,” he said.</span></p>
<p><span>Rental yields are currently the lowest in Melbourne - a typical house is returning a gross yield of 3.2% while units are providing a higher gross yield, averaging 4.3%. Sydney follows closely behind, recording a gross yield of 3.4% for houses and 4.5% for units.</span></p>
<p><span>“If the current trend continues, it won’t be long before Sydney overtakes Melbourne as the lowest yielding city," Tim Lawless said.</span></p>
<p><span>"Sydney yields have slipped by 41 basis points over the past twelve months compared with Melbourne where the gross rental yield is 22 basis points lower.”</span></p>
<p><span>“Clearly, investors are not bothered by the low rental yields that are currently available with housing finance data showing investors comprise a record 51 of the value of new home loan originations, “ Mr Lawless said.</span></p>
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