Buyers are moving away from some of the more expensive cities, towards growth areas where housing is more affordable, a new report shows.
NAB’s update on the housing market for April 2018 shows that regional markets – particularly those close to Melbourne, Sydney and Canberra – have been outperforming the capital cities since October last year.
Australian dwelling values held firm in March, with the combined capitals continuing a softening trend, recording a 0.2 per cent fall, while regional markets saw a 0.4 per cent rise in values over the month.
Across the capital cities, Sydney has continued to show the largest monthly decline, with dwelling values down 0.3 per cent in March to be 3.9 per cent lower than July’s peak last year. Melbourne, down 0.2 per cent, and Adelaide, down 0.3 per cent, were the only other capitals to see dwelling values fall over the month.
At the other end of the spectrum is Hobart, where dwelling values were 1.7 per cent higher over the month. Darwin recorded its first monthly rise in almost a year, up 1 per cent, while subtle rises were recorded across the Brisbane, Perth and Canberra markets.
Another noticeable trend the report highlights is that unit values are now outperforming house values. NAB’s economists suggest this could mean buyer demand is becoming more concentrated in the medium-to-high density sector where entry prices are lower and commuting times are often more convenient, compared with the similarly priced detached housing markets around the outer fringes of the city.
Outside the Sydney and Melbourne markets, where affordability constraints aren’t as pressing, it is the detached housing sector that is showing stronger conditions.
The report notes that the latest population data offers another reason why housing market conditions remain buoyant. The national population hasn’t grown this fast since 2013; overseas migration is trending higher which creates additional demand for housing. While the vast majority of overseas migrants arrive in New South Wales and Victoria, the trend in net overseas migration is tracking higher across most states.
Another factor that may be supporting housing market conditions is the surge in first home buyer numbers, particularly in New South Wales and Victoria where stamp duty concessions have been available since July last year. In New South Wales, prior to the concessions, first time buyers comprised just 8.8 per cent of the owner occupier market and the proportion has risen to a recent high of 14.3 per cent in December last year.
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