Capital Cities

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<p><span>CoreLogic undertook analysis of the recent March 2018 quarter consumer price index (CPI) data which confirmed that in inflation adjusted terms, dwelling values are now lower in most capital cities.</span></p>
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<p><span>(Note: consumer price index (CPI), which measures inflation, increased by 0.4% over the March 2018 quarter to be 1.9% higher year-on-year. With the release of this data, it is also possible to look at inflation-adjusted or real changes in dwelling values across the capital cities. When looking at these figures, the inflation adjustment means that value growth is lower).</span></p>
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<p><span>The results showed that national dwelling values fell by -1.0% and </span>were -0.7% lower over the past 12 months, however, Hobart was the only capital city where real values increased over the quarter (+3.0%) with Sydney recording the largest quarterly fall (-2.2%).</p>
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<p><span>Over the past twelve months, only Melbourne (+3.4%), Hobart (+10.9%) and Canberra (+1.0%) have seen dwelling values outpace inflation. The largest decline over the year was recorded in Darwin (-9.3%) followed by Perth (-4.3%) and Sydney (-4.0%).</span></p>
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<p><span>Over the past decade, only Sydney (+43.3%) Melbourne (+38.7%) </span><span>and Hobart (+6.4%) have recorded ‘real’ growth in dwelling values.</span></p>
<p><a href="https://www.propertyobserver.com.au/images/2018/4/26/corelogic%20expert%20obs%201.jpg" target="_blank">Click here</a> to enlarge</p>
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<p><span>These latest figures really highlight just how </span><span>narrow value growth has been in the national housing market over the past decade. It also highlights that low mortgage rates alone have not been the key driver of value growth - mortgage rates are </span>the same in Sydney as they are in Perth yet the former has recorded real growth of 43.3% while the latter has seen values fall by -25.0%.</p>
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<p><span>With dwelling values dropping over recent months, all capital cities, except Hobart, now have real values which sit below their previous peak. Nationally, values are -2.0% lower than their June 2017 peak and across the combined capital cities values are a slightly greater -</span><span>2.5% lower. Let’s take a look at how dwelling</span><span>values have tracked in inflation adjusted terms across each capital city.</span></p>
<p><a href="https://www.propertyobserver.com.au/images/2018/4/26/corelogic%20expert%20obs%202.jpg" target="_blank">Click here</a> to enlarge</p>
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<p><span>Sydney </span><span>– </span><span>values are 5.3% lower than their June 2017 peak.</span></p>
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<p><span>Melbourne </span><span>– </span><span>after peaking in December 2017, values are currently -0.9% lower.</span></p>
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<p><span>Brisbane </span><span>– </span><span>values peaked back in March 2008 and are currently - 12.5% lower.</span></p>
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<p><span>Adelaide </span><span>– </span><span>values currently sit -7.4% below their June 2010 peak.</span></p>
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<p><span>Perth </span><span>– </span><span>the city has seen values fall by -28.5% from their peak in December 2006. dwelling </span><span>values.”</span></p>
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<p><span>Hobart </span><span>– </span><span>with values increasing a further 10.9% over the past year, it is the only city where real dwelling values are currently at their peak.</span></p>
<p><span>Darwin </span><span>– </span><span>real dwelling values peaked in March 2013 and have since fallen by -28.2%.</span></p>
<p><span>Canberra </span><span>– </span><span>dwelling values are -6.8% lower than their June 2010 peak.</span></p>
<p><span>Although the rate of inflation is quite slow and remains below the Reserve </span><span>Bank’s </span><span>target range of 2% to 3% annually, value growth is now broadly slower and is expected to remain that way over the coming quarters.</span></p>
<p><span>As </span><span>a result, when looking at inflation-adjusted dwelling values the expectation is that they will continue to fall over the coming quarters which means that as the cost of other items increase and inflation rises, relatively speaking, the cost of housing will reduce. </span><span>We’ve </span><span>seen this result occurring in most capital cities for a number of years but is a relatively recent development in Sydney and Melbourne.</span><span>”</span></p>
<p><span>The </span><span>flow-on effect of value falls remains to be seen, however, it may result in less expenditure elsewhere across the economy, particularly in Sydney and Melbourne which have had strong retail demand over recent years due to the wealth-effect of increasing dwelling values.</span><span>”</span></p>
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<p><span><em><span>CAMERON KUSHER</span> is head of research for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/"><span class="s2">here</span></a>.</em></span></p>
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Hobart the only capital city where real dwelling values sit at their peak

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<div>Like many getting-a-bit-long-in-the-tooth Sydneysiders, I've increasingly been having recurring daydreams about selling a place at Bondi or in the inner west and trading it for a mansion at Maroochydore (or sometime it's a mooring at Mooloolaba). </div>
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<div>Probably about once a fortnight I have these fantasises, on average, I reckon. </div>
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<div>And then reality bites.</div>
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<div>I wake up and find that Infrastructure Australia (IA) has released another report, which always brings me back to earth and reminds me why I invested in inner-Sydney property in the first place. </div>
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<div>As ever, IA's Future Cities report presents a range of scenarios.</div>
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<div>There's a decentralised scenario which incorporates acres of building and hundreds of thousands of new homes in the south-west.</div>
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<div>And then there's a centralised scenario where everyone crams like crazy into zones close to the Central Business District (CBD), and to a lesser extent Parramatta.</div>
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<div>And then there's the medium-density scenario, which is a realistic mixture of the two, incorporating population growth across the city and on balance the most likely outcome. </div>
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<div>The scenarios have one thing in common: none of them envisages a Sydney in 2046 with a population of under 7.34 million. </div>
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<div><img src="https://1.bp.blogspot.com/-PdMnCv6NaPM/WpCTHx3DIuI/AAAAAAAAoic/PKX5PyrObPwoXRjOHlN760TUpD5B47wUwCLcBGAs/s640/A3.jpg" width="640" height="240" data-original-height="500" data-original-width="1324"></div>
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<div>Although people are expected to live all over Sydney, the share of employment will remain heavily skewed to the CBD and city fringe, and to a secondary extent Parramatta. </div>
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<div>And there's a great deal of consideration of how people will get around with millions of extra people in essentially the same amount of space (as an investor, I've always gone for train links to the City or walking distance from the Sydney CBD). </div>
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<div>Nobody can predict the future, but one thing I will hang my hat on is a massive ongoing demand for rentals close to the middle of Sydney. </div>
<p>From the horse's mouth...</p>
<p>Between 2017 and 2046, Australia’s population is projected to increase by 11.8 million people. </p>
<div>That’s equivalent to adding a new city, roughly the size of Canberra, each year for the next 30 years. </div>
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<div>About 75% of this growth will occur in Sydney, Melbourne, Brisbane and Perth.</div>
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<div>Population growth is a central driver of this change. </div>
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<div>In the next 30 years, Sydney’s population is projected to increase by 2.4 million people, growing to be a city of 7.4 million. </div>
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<div>Over the same period, Melbourne is projected to grow by 2.7 million people, to be a city of 7.3 million. </div>
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<div>Between now and 2046, Brisbane is projected to grow by 1.6 million people and Perth by 2.2 million people, delivering cities of just under 4 million and 4.3 million, respectively.</div>
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<div>This means the Brisbane and Perth of tomorrow will become cities the size of Melbourne and Sydney today. </div>
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<div>While Melbourne and Sydney will become cities comparable to the current size of some of the world’s most significant urban economies, operating more like the Hong Kong, New York and London of today.'</div>
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<div>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</div>
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Brisbane and Perth of tomorrow will be cities the size of Melbourne and Sydney today: Pete Wargent

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<p class="post-title entry-title">EXPERT OBSERVER</p>
<div>Property transaction volumes have been crippled in recent months.</div>
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<div>But one key dynamic has not changed.</div>
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<div>The capital cities continue to create hundreds of thousands of the most favourable employment opportunities...and there still ain't any more well-located land.</div>
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<div>Capital city vacant land prices increased by a massive 16 per cent to a record high of $336,124 over the year to June 2018, as supply fails dismally to keep pace with demand. </div>
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<div>This was much faster than the 5 per cent increase for regional lot values. </div>
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<div>Sydney may still have the highest land price at $477,250 at the end of the June quarter.</div>
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<div>But Melbourne recorded faster growth, with the median land price per square metre exploding another 27 per cent higher higher over FY2018. </div>
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<div>Sydney's median vacant land price per square metre is now $1,100, ahead of Melbourne at $885.</div>
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<div>Price pressures are still strong in the residential land market, according to HIA.</div>
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<div>They found that the price and number of vacant residential lots sold increased across the state capital cities in the June 2018 quarter.</div>
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<div>The weighted median residential lot price for Australia's state capitals increased by 3.8% to $336,125 in the June 2018 quarter to be 15.5% higher over the year.</div>
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<div>Melbourne saw the strongest price surge with vacant residential land in Melbourne jumping 26.5% over the year to the June 2018 quarter.</div>
<p class="post-body entry-content">Tim Lawless CoreLogic' Research Director agreed with this sentiment stating upwards pressure on capital city land values will continue. </p>
<div>He found construction costs are also rising faster than inflation.</div>
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<div>And accordingly, the future price of new detached housing will be "inevitably higher" according to CoreLogic analysis.</div>
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Capital city land price boom continues: Pete Wargent

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<p>This week there were 2,103 capital city auctions held and the preliminary clearance rate was 76.3 per cent across 1,704 results.</p>
<p>This week’s clearance rate represents a small fall from last week (76.9 per cent) and auction volumes are lower (2,512). Last year, the final auction clearance rate was 70.8 per cent, indicating that conditions across the auction market still remain stronger than at the same time last year; however the gap between the clearance rate is no longer as large as we saw earlier in the year. At the same time last year, 1,569 auctions were held, significantly lower than the number held this week.</p>
<p><a href="/images/2015/08/17/20150817-Combined-capitals.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/08/17/20150817-Combined-capitals.jpg" alt="" width="779" height="588"></p>
<p><span>Across </span><strong>Melbourne</strong><span>, 902 auctions were held this week, with a preliminary clearance rate of 76.5 per cent. This week’s clearance rate for Melbourne is lower than last (78.5 per cent), but higher than one year ago (73.3 per cent). Similarly, the number of auctions is lower than last week (1,085) and higher than a year ago (727). This week, there was only one Melbourne sub-region where the clearance rate was above 80 per cent. Outer East Melbourne saw 86.4 per cent of the 59 reported results sell. Following on from this, the second highest clearance rate for the week was across South East Melbourne at 78.5 per cent.</span></p>
<p><a href="/images/2015/08/17/20150817-Melbourne.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/08/17/20150817-Melbourne.jpg" alt="" width="748" height="506"></span></p>
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<p><span>There were 907 </span><strong>Sydney</strong><span> auctions held this week and across the 702 reported results, 80.3 per cent were successful, pushing the cities clearance rate back above the 80 per cent mark for the first time in 5 weeks, so it will be interesting to see if the final results remain this high. Over the previous week, Sydney’s clearance rate was 78.3 per cent and 76.2 per cent last year. This week’s preliminary clearance rate for the city is 4.1 percentage points higher than one year ago, a much less significant difference than earlier this year when the gap between this year and last year’s clearance rate was consistently around the 10-15 per cent mark. So far, all of the 13 results reported to CoreLogic RP Data for the Outer South West region were sold; however there are still 9 results yet to be captured. The Inner West (86.6 per cent), City and Inner South (85.9 per cent) and North Sydney and Hornsby regions (85.1 per cent) were all strong contributors to Sydney’s strong preliminary result this week.</span></p>
<p><a href="/images/2015/08/17/20150817-Sydney.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/08/17/20150817-Sydney.jpg" alt="" width="746" height="512"></span></p>
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<p><span>This week, </span><strong>Brisbane’s</strong><span> preliminary clearance rate was 60.2 per cent across 93 reported results. There were 130 homes taken to auction across the city this week, compared to 147 last week and 98 at the same time last year. Last week, Brisbane’s clearance rate was 61.1 per cent, while one year ago exactly half of all the reported auctions were sold. So far this week, 23 </span><strong>Gold</strong><span> </span><strong>Coast</strong><span> auction results have been reported, with 15 sales, representing a success rate of 65.2 per cent.</span></p>
<p><a href="/images/2015/08/17/20150817-Brisbane.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/08/17/20150817-Brisbane.jpg" alt="" width="760" height="513"></span></p>
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<p><strong>Adelaide’s</strong><span> preliminary clearance rate is 71.2 per cent this week, falling from 77.4 per cent last week (the strongest result for the city since early April) and higher than one year ago, when 65.6 per cent of auctions recorded a sale.</span></p>
<p><a href="/images/2015/08/17/20150817-Adelaide.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/08/17/20150817-Adelaide.jpg" alt="" width="747" height="510"></span></p>
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<p>The clearance rate for <strong>Perth</strong> was just 23.1 per cent this week based on preliminary results. Last week 50.0 per cent of Perth auctions were successful, while one year ago the cities clearance rate was 40 per cent.</p>
<p>There were 50 <strong>Canberra</strong> homes taken to auction this week, with 77.4 per cent selling. Over the previous week, a 74.1 per cent clearance rate was recorded and one year ago 51.2 per cent of reported results were successful.</p>
<p>Across <strong>Tasmania</strong> 5 auction results have been reported this week, with 3 sales.</p>
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Combined capital city clearance rate remains steady: CoreLogic RP Data's Shana Miller

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<p>EXPERT OBSERVER</p>
<p>In previous instances when value growth has slowed or started to fall in Sydney and Melbourne the experience has often been that value growth has ramped-up in other capital cities. This makes sense given that as affordability deteriorates in certain areas of the country people start to turn their attention elsewhere.  </p>
<p>This week’s blog takes a look at the comparative value of housing in other capital cities and nearby markets relative to in Sydney and Melbourne.</p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-07/2018-07-23-blogimg1.png" alt="Dwelling value premium in Sydney relative to other capital cities" width="584" height="191"></p>
<p> <br>Sydney is the nation’s most expensive capital city housing market currently with the median dwelling value in June 2018 recorded at $870,554. The premium for the median dwelling value in Sydney relative to the other national capital cities is: 21% for Melbourne, 76% for Brisbane, 98% for Adelaide, 89% for Perth, 99% for Hobart, 101% for Darwin and 48% for Canberra. With dwelling values in Sydney now falling, the premium is reducing however, the cost of housing in Sydney relative to other capital cities is generally significantly higher than the long-term averages. In fact only Melbourne (42%) and Hobart (103%) have a current differential which is lower than the long-term average.</p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-07/2018-07-23-blogimg2.png" alt="Dwelling value premium in Sydney relatice to Regional NSW areas" width="592" height="194"></p>
<p> <br>Of course, people that potentially migrate out of Sydney don’t necessarily only choose to go interstate, they may also migrate intrastate. The above chart highlights the value differential over time between Sydney and those regions adjoining the city as well as the Capital Region (adjoining Canberra) and Richmond-Tweed (adjoining South-East Queensland). The premium for Sydney dwellings compared to those in the other regions highlighted is currently: 105% for Capital Region, 176% for Central West, 113% for Hunter Valley exc Newcastle, 29% for Illawarra, 52% for Newcastle and Lake Macquarie, 64% for Richmond-Tweed and 47% for Shoalhaven. Although values have increased in regional NSW over the past year, the rate of growth has slowed substantially, particularly within Illawarra, Newcastle and Lake Macquarie and Southern Highlands and Shoalhaven. These three regions have been seeing strong value growth over the past five years and they are also the only three regions in which the value differential is lower (substantially so) than the long-term average.</p>
<p><a href="https://www.corelogic.com.au/sites/default/files/2018-07/2018-07-23-blogimg3.png" target="_blank">Click</a> to enlarge</p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-07/2018-07-23-blogimg3.png" alt="Dwelling value premium in Melbourne relative to other capital cities" width="590" height="193"></p>
<p> <br>Looking at the value differential between Melbourne and other capital cities, except Sydney, Melbourne’s median dwelling value of $716,774 is higher than all other capital cities. The premium for Melbourne is currently recorded at: 45% for Brisbane, 63% for Adelaide, 55% for Perth, 64% for Hobart, 65% for Darwin and 22% for Canberra. The value differential for Melbourne to all these capital cities is greater than the long-term average. In fact, notwithstanding the recent slight reductions due to Melbourne value falls, the value gap between Melbourne and Brisbane, Melbourne and Adelaide and Melbourne and Darwin is the largest it has ever been.  </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-07/2018-07-23-blogimg4.png" alt="Dwelling value premium in Melbourne relative to Regional Vic areas" width="590" height="193"></p>
<p> <br>The above chart looks at the dwelling value premium for Melbourne relative to the major regional areas adjoining the capital city. Melbourne retains a significant premium in terms of housing costs relative to these areas. What is very different to what was shown in the chart for Sydney and Regional NSW areas is that outside of Geelong, the housing cost premium in Melbourne remains well above the long-term average. This suggests that while value growth has been rippling out of Melbourne to Geelong for some time, it has only just started to spill-out into the other three regions recently.  The current premium for Melbourne dwellings relative to the other regions is: 99% for Ballarat (80% long-term average), 100% for Bendigo (74% long-term average), 29% for Geelong (40% long-term average), 123% for Latrobe-Gippsland (89% long-term average). </p>
<p>There are some explainable reasons why dwelling values in Sydney and Melbourne have risen so substantially over recent years. These include but are not limited to: strong rates of migration to the cities, dramatically increased foreign investors, low mortgage rates, increased demand from investors and much stronger economic conditions than elsewhere in the country. The latest data shows a pull-back in net overseas migration, slowing interstate migration to NSW and Vic, foreign investment has reduced, fewer local investors and reduced availability of credit for housing despite still low mortgage rates. Sydney and Melbourne still have comparatively strong economies but we have started to see the economic performance elsewhere improve. Sydney and Melbourne have also seen a dramatic reduction in housing affordability over recent years as dwelling values have increased much faster than household incomes. The value gap between Sydney and Melbourne and other regions doesn’t necessarily mean that value growth will pick-up elsewhere where dwelling values are much lower. However, if other areas of the country can improve their economic performance, the lure of much more affordable housing may be enough of a lure to see an increasing number of Sydneysiders and Melbournians to migrate away from these two cities to other areas of the country.</p>
<p><em>Cameron Kusher is a property research analyst for CoreLogic</em></p>
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Value differential of different capital cities in Australia over the years: Cameron Kusher

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<p>Nationally, rent values declined 0.3% in the month of June and 0.5% over the quarter, according to the latest findings from CoreLogic.</p>
<p>This was the largest quarterly fall in rents since September 2018, and the CoreLogic June 2020 quarterly rental review predicts a further downturn in the coming months.</p>
<p>Eliza Owen, head of CoreLogic’s research in Australia, said that the decline in rent values over the quarter came at a time when the rental market was already relatively weak.</p>
<p>“Annualised growth in national rent values was just 1.1% in the five years to June 2020, compared with annualised growth in the selected living cost index of 1.4% in the 5 years to March for employee households", Owen says.</p>
<p>"In other words, rents have generally seen softer growth than the growth in general cost of living for most households.</p>
<p>“Prior to the fall in rent values over the June quarter, growth in rents had seen some momentum building, with the national CoreLogic rental index recording consecutive increases between September 2019 and March 2020.</p>
<p>"These signs of rebounding rent values came as investor participation in the market was falling from 2017, and subsequently, the rate of new supply additions in rental properties had been falling.”</p>
<p>Capital city rental yields have been more profoundly and immediately impacted by the negative economic shock resulting from COVID-19.</p>
<p>Capital city rents fell 0.7% in the June quarter, compared with a 0.2% rise in rents across regional Australia.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/7/29/CL%20quarterly%20change%20in%20rents.jpg" alt=""></p>
<p>COVID-19 has pivoted the trajectory of rental market performance, with six of the capital city dwelling markets seeing a quarterly decline in rental values.</p>
<p>The Hobart rent market had the largest value falls in the June quarter at 2.3%, followed by Sydney at 1.3%.</p>
<p>Four of the eight capital cities saw no growth or falls in rent values over the year to June.</p>
<p>Perth and Adelaide still saw growth in rent values over the year, at 2.2%.</p>
<p>The narrow differential between Sydney and Canberra rents continue, despite the COVID-19 downturn.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/7/29/CL%20median%20rents.jpg" alt=""></p>
<p>Estimated median asking rents in Sydney fell 1.6% in the June quarter, against a 1.7% decline in Canberra rents.</p>
<p>Sydney remained the more expensive in terms of median asking rents, at $568 per week.</p>
<p>This was just $2 higher than the estimated median asking rent in Canberra.</p>
<p>Gross rental yields were 3.73% nationally in the June quarter, down 3 basis points over the March quarter and 41 basis points over the year.</p>
<p>In the 12 months to June, rental yields fell across seven of the eight capital city markets. Perth was the only exception, where yields increased a modest 3 basis points over the year.</p>
<p>In the June quarter of 2020, regional rental yields slipped 3 basis points to 4.93%.</p>
<p>The combined capital cities regions fell 2 basis points in the quarter to 3.44%.</p>
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j.ballantyne1990-6AQqhLzZaK

Capital cities hit hard as rental yields fall in June quarter: CoreLogic 2020 quarterly rental review

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<p>EXPERT OBSERVER</p>
<div><strong><span style="text-decoration: underline;">Demographic trends</span></strong></div>
<div> </div>
<div>A quick break from the Coronavirus news which is evidently usurping the planet!</div>
<div> </div>
<div>The ABS reported that the capital cities population of Australia increased by +303,100 in FY 2019.</div>
<div> </div>
<div>Greater Sydney, which includes the Central Coast, increased by +87,100 or +1.7 per cent, and remained the most populated city at 5.31 million.</div>
<div> </div>
<div>However, Melbourne grew at the fastest pace, up by +113,500 or +2.3 per cent to 5.08 million.</div>
<div> </div>
<div>As in previous years the densest locations included parts of inner-city Melbourne, Sydney's Potts Point-Woolloomooloo, and Ultimo-Pyrmont.</div>
<div> </div>
<div>Brisbane's population increased quickly too, at +2.1 per cent or +52,600, to increase to 2.51 million.<br><br>
</div>
<div class="separator"><a href="https://1.bp.blogspot.com/-YZHXmPmN8rA/XnsDFu-mUhI/AAAAAAAA04c/9nd1a1rjcTkeSzTb4O3YdWMvXjSkJ6pVwCNcBGAsYHQ/s1600/ABS.jpg"><img src="https://1.bp.blogspot.com/-YZHXmPmN8rA/XnsDFu-mUhI/AAAAAAAA04c/9nd1a1rjcTkeSzTb4O3YdWMvXjSkJ6pVwCNcBGAsYHQ/s640/ABS.jpg" width="640" height="346" data-original-height="361" data-original-width="665"></a></div>
<p> </p>
<div><span style="text-decoration: underline;"><em>Source: ABS</em></span></div>
<p> </p>
<div>Capital cities accounted for 79 per cent of population growth over the financial year, reported the ABS, and some 17 million Aussies now live in the capital cities.</div>
<p><br><span>Immigration will effectively be paused in 2020 due to the...well, you know what!</span><br><br><span><br></span></p>
<div class="separator"> </div>
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Capital cites population up 303,000 in FY2019, but paused in 2020: Pete Wargent

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<p>Figures released by SQM Research show a decrease in national residential property listings across all capital cities in December 2019. </p>
<p>National residential property listings across capital cities show an overall 12 per cent decline in 2019.</p>
<p>In December 2019, listings decreased by 14.8 per cent, declining from 338,971 in November to 288,966.</p>
<p>"The month of December traditionally records falls in properties listed for sale as it is the start of the festive and summer holiday period, whilst November shows a surge in listings as vendors are keen to sell before the holiday season approaches," explains Louis Christopher, managing director of SQM Research.</p>
<p>"The recent devastating bushfires in NSW, Canberra and Victoria could also result in declines in property listings and impact property values in these regions in the coming months."</p>
<p>All capital cities saw decreases in property listings over the month with the most significant decrease experienced in Sydney with 28.7 per cent, followed closely by Canberra with 28.1 per cent.</p>
<p>Property listings in Sydney fell from 32,101 in November 2019 to 22,888 in December while Canberra saw a decline from 4,998 to 3,595. </p>
<p><img src="https://www.urban.com.au/images/2020/1/9/N2_Market_Month.jpeg" alt="" width="790" height="202"></p>
<p>Year-on-year listings similarly show declines for all capital cities with Sydney showing a decline of 30.1 per cent, followed by Darwin with 25.2 per cent, and with Canberra only recording an overall 14.6 per cent decline. Meanwhile, Brisbane is revealed as declining the slightest with only 8.4 per cent. </p>
<p><img src="https://www.urban.com.au/images/2020/1/9/N1_Stock%20Market%20Table.png" alt="" width="796" height="263" style="caret-color: #000000; color: #000000;"></p>
<p>Stock on Market Table, SQM Research.</p>
<p> </p>
<p> </p>
<p> </p>
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Sydney vendors vacate market as December 2019 property listings decrease: SQM Research

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<p><strong>EXPERT OBSERVATION</strong></p>
<p>The CoreLogic Home Value Index of national home prices rose by 1.7% in November, the biggest increase since October 2003.</p>
<p>And capital city home prices rose by 2.0% – also the biggest lift in 16 years.</p>
<p>Regional home prices rose by 0.5% in the month. Sydney home prices lifted by 2.7% in November – the biggest monthly increase since October 1988.</p>
<p>Of the 88 SA4 regions across Australia, home prices were up on a year ago in 39 regions. Home prices in West and North-West Tasmania rose by 5.9% over the year.</p>
<p>The Australian Industry Group (AiGroup) Performance of Manufacturing Index fell from 51.6 points to a 3-year low of 48.1 points in November.</p>
<p>And the ‘final’ CBA/IHS Markit Manufacturing Purchasing Managers' Index fell from 50.0 points to a 31⁄2-year low of 49.9 points. Any reading below 50 indicates contraction in activity.</p>
<p><strong>What does it all mean?</strong> </p>
<p>Aussie home prices are booming. National property prices lifted by the most in 16 years in November. And in Australia’s most populous city – Sydney – home prices surged by 2.7%, posting the biggest monthly gain in 31 years.</p>
<p>Record-low mortgage rates and an easing in lending standards have seen a surge in demand.</p>
<p>In fact, preliminary ‘unadjusted’ auction clearance rates last weekend came in at 84.7% in Sydney and 78.3% in Melbourne, according to CoreLogic results.</p>
<p>And on the supply side, the limited pool of housing stock for sale is also supporting a surge in home price growth.</p>
<p>For combined capital cities, the number of new homes listed for sale is down by 15.3% over the year to November with Sydney listings down 23.1%, according to CoreLogic. Newly advertised listed stock is at the lowest level since 2007.</p>
<p>The rapid recovery in the property market since the Federal Election has seen national home prices post their first annual gain (up 0.1%) since April 2018. Still, in many regions, home prices are lower than a year ago.</p>
<p>In fact there were annual gains in home prices in only 39 of the 88 regions in November. But home prices in Tasmania’s West, North West and South East are up 5.3-5.9% over the year to November. And in Melbourne’s posh Inner East, annual gains are a nation-leading +8.0%. </p>
<p><em><a href="https://www.propertyobserver.com.au/images/2019/12/2/common%20sec%201.jpg" target="_blank">Click here</a> to enlarge:</em></p>
<p><strong> <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/12/2/common%20sec%201.jpg" alt=""></strong></p>
<p><em><a href="https://www.propertyobserver.com.au/images/2019/12/2/commonsec%202.jpg" target="_blank">Click here </a>to enlarge:</em></p>
<p><strong><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/12/2/commonsec%202.jpg" alt=""></strong></p>
<p><strong>What do the figures show? </strong></p>
<p><strong>Home prices</strong></p>
<p>The CoreLogic Home Value Index of national home prices rose by 2.0% in November, the biggest increase since October 2003. Home prices are 0.1% higher over the year. </p>
<p>In capital cities, prices rose by 2.0% – the biggest lift in 16 years – to be up 0.4% over the year to November. House prices rose by 2.1% and apartment prices lifted by 1.6%. House prices were up 0.1% on a year ago and prices of apartments increased by 1.4%. </p>
<p><em><a href="https://www.propertyobserver.com.au/images/2019/12/2/commonsec%203.jpg" target="_blank">Click here</a> to enlarge:</em></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/12/2/commonsec%203.jpg" alt=""></p>
<p>In regional areas, home prices rose by 0.5% with houses and apartment prices also both up by 0.5%. Regional home prices are down 1.2% on the year to November. </p>
<p>The average Australian capital city house price (median price) was $652,446 and the average unit price was $563,439 in November.</p>
<p>Dwelling prices rose in seven of the eight capital cities in November. Home prices rose by the most in Sydney (up by 2.7%), followed by Hobart (up by 2.3%), Melbourne (up by 2.2%), Canberra (up by 1.6%), Brisbane (up 0.8%), Adelaide (up by 0.5%) and Perth (up by 0.4%). But prices fell in Darwin (down by 1.2%). </p>
<p>Home prices were higher than a year ago in four of the eight capital cities in November. Prices rose the most in Hobart (up by 4.2%), followed by Canberra (up by 3.0%), Melbourne (up by 2.2%) and Sydney (up by 1.6%).</p>
<p>But prices were down in Darwin (down by 10.9%), Perth (down by 7.7%), Brisbane (down by 0.5%) and Adelaide (down by 0.5%).</p>
<p>Total returns on national dwellings rose by 4.1% in the year to November - the most in 19 months - with houses up by 3.6% on a year earlier and units up by 5.4%.</p>
<p>In contrast, the S&amp;P/ASX All Ordinaries Accumulation Index lifted by 25.9% over the year to November. </p>
<p><a href="https://www.propertyobserver.com.au/images/2019/12/2/commonsec%204.jpg" target="_blank">Click here</a> to enlarge:</p>
<p><strong><span style="text-decoration: underline;"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/12/2/commonsec%204.jpg" alt=""></span></strong></p>
<p><strong>Manufacturing Purchasing Managers’ Indexes - November</strong></p>
<p>The Australian Industry Group (AiGroup) Performance of Manufacturing Index fell from 51.6 to a three-year low of 48.1 points in November. And the CBA/IHS Markit Manufacturing Purchasing Managers' Index fell from 50.0 points to 3½-year lows of 49.9 points in November. Any reading below 50 indicates contraction. </p>
<p>According to AiGroup: “Drought remains a top concern for many manufacturers, particularly those located in rural areas or those selling metal products and machinery &amp; equipment to the agricultural sector. The small but diverse Textiles, Clothing and Footwear (TCF), paper and printing’ sector recorded its lowest reading since early 2013, with respondents noting weak market demand and rising raw material costs."</p>
<p>According to CBA/IHS Markit: “Australian manufacturing conditions were broadly stagnant in November, as a survey-record fall in new orders and a decline in output weighed on the headline PMI. A weakening sales trend contributed to a further fall in backlogs which, in turn, dampened hiring. Jobs growth was marginal. Meanwhile, firms once again failed to add to inventories of both inputs and final goods while business confidence fell to the lowest since June 2016.”</p>
<p><em><a href="https://www.propertyobserver.com.au/images/2019/12/2/commonsec%205.jpg" target="_blank">Click here</a> to enlarge:</em></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/12/2/commonsec%205.jpg" alt=""></p>
<p><strong><span>What is the importance of the economic data? </span></strong></p>
<p>The CoreLogic Hedonic Australian Home Value Index is based on Australia’s biggest property database. Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the CoreLogic Hedonic Index includes all properties. Home prices are an important driver of wealth and spending.</p>
<p>The AiGroup and CBA Purchasing Manager indexes (PMIs) for services and manufacturing are released each month. The Australian PMIs are the local equivalents of similar indexes released for other countries.</p>
<p>The PMIs are amongst timeliest economic indicators released in Australia. The PMIs are useful not just in showing how the sectors are performing but in providing some sense about where they are heading. The key ‘forward looking’ components are orders and employment. </p>
<p><em><a href="https://www.propertyobserver.com.au/images/2019/12/2/commonsec%206.jpg" target="_blank">Click here</a> to enlarge:</em></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/12/2/commonsec%206.jpg" alt=""></p>
<p><strong>What are the implications for interest rates and investors?</strong></p>
<p>The Aussie property market is booming due to strong demand, reduced supply and record low interest rates.</p>
<p>And with listings remaining at very low levels, residential home building falling and population growth remaining solid, could a potential housing shortage boost home price growth even further in 2020? Yes, according Commonwealth Bank Group economists whom are forecasting a 6.1% lift in capital city home prices over the year, led higher by Sydney (up 7.0%) and Melbourne (up 8.0%).</p>
<p>Gains of 2.5-4.0% are expected elsewhere except Darwin, with prices tipped to be flat. If this materialises, consumers may feel a tad more optimistic about their wealth and be encouraged to increase their discretionary spending. But tepid wage growth and elevated mortgage debt will likely restrain consumers.  </p>
<p>Global manufacturing conditions have improved. In fact, the November purchasing manager index readings for leading exporters’ Germany, Japan and China have bottomed after a period of contraction.</p>
<p>Trade tensions between the US and China have eased in recent months with the official Chinese factory gauge expanding in November for the first time since April on improving external demand.</p>
<p>But the outlook for global growth is highly dependent on a ‘phase one’ trade deal negotiations with the next tranche of US tariffs – 15% duty on US$156 billion worth of Chinese products – due on December 15. </p>
<p>But things aren’t as promising for Aussie manufacturers. Both the AiGroup and CBA/IHS Markit manufacturing gauges hit three-year lows with activity contracting in November.</p>
<p>Like the Reserve Bank and most market economists, the AiGroup has implored the Federal Government to deploy additional fiscal stimulus measures to ‘jump-start’ the economy.</p>
<p>The AiGroup said: The further fall in new orders is far from encouraging...stimulus from interest rate and income tax cuts has not so far flowed through to consumer and business spending. The Government will need to look very closely at additional stimulus options over coming months."</p>
<p>Commonwealth Bank Group economists expect another rate cut in February 2020. But with limited conventional monetary policy ammunition at its disposal, we would prefer to see additional fiscal initiatives – such as infrastructure spending and tax cuts - be announced by the Federal Government to prop up economic activity.</p>
<p>That said, credit ratings agency Standard &amp; Poor’s last week warned that Australia’s AAA sovereign credit rating could be at risk should the government announce large spending measures.  </p>
<p align="left"><em><em><strong>Ryan Felsman</strong> is a senior economist at CommSec.</em></em></p>
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