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CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Tuesday, 20 September 2016

Capital city prices rose in Q2

Prices rise in Q2

Fairly in line with market forecasts dwelling prices rose by +2.0 per cent in the June 2016 quarter according to the ABS with Sydney (+2.8 per cent),  Melbourne (+2.7 per cent), and Brisbane (+1.1 per cent).

Of the smaller capitals, Canberra also showed a solid increase of +2.2 per cent.

The ABS indexes run back to September 2003 with the median house price (+98 per cent) and attached dwelling price (+93 per cent) having increased since that time. 

This latest move takes the total value of residential dwellings to beyond $6 trillion, an increase of +$1.6 trillion or +36 per cent since June 2012.

The market is now accelerating in the third quarter according to Alan Oster, Chief Economist of National Australia Bank (you see what I did there?).

Auction clearance rates have again approached record highs again in Sydney, and Oster predicts a substantial +4 per cent gain in the harbour city for Q3, as well as +3.5 per cent for Melbourne. 

Large capital cities lead

House prices rose by +3.2 per cent in Sydney in the June quarter, with attached dwelling prices showing a much steadier trajectory (both up and down) through the course of this cycle in rising by a further +2.0 per cent. 

After six months of house price declines Sydney's all dwellings index hit a fresh all-time high, being +83.7 per cent higher than in December 2008.

Brisbane notched up its sixteenth consecutive quarterly gain with prices rising by +1.1 per cent.

Since Q3 2012 prices in Brisbane have recorded a studious recovery to rise by +18 per cent, while Adelaide (+13 per cent) and Hobart (+13 per cent) have followed a similar, if slightly more subdued, trajectory. 

In the resources capitals prices have declined since the beginning of 2015 (click charts to expand).

State versus state

At the state level over the year to June the mean price has continued to rise in New South Wales (+$35,400), Victoria (+$31,100), Queensland (+$10,100), and South Australia (+$16,800). 

On the other hand the median price in Western Australia has retraced by $37,300 with a notable collapse having taken place up in the Pilbara, and there was also a decline in the Northern Territory mean price of $20,500. 

The total value of dwelling stock has increased significantly over the past four years in New South Wales (+$819 billion), Victoria ($+453 billion), and Queensland (+$169 billion).

Supply response

Finally, the total number of residential dwellings increased by +46,900 in Victoria and +40,600 in New South Wales over the 2016 financial year. 

There are now more than 9.7 million dwellings in Australia.

Over the past four years Victoria (+7.9 per cent) has been far more successful at increasing the total size of its dwelling stock than New South Wales (+4.9 per cent). 

From a lower base the uplift has been considerably more pronounced in the Northern Territory (+10.4 per cent) and the ACT (+10.4 per cent).

The wrap

Overall, there were solid price gains in Q2 which generally matched market expectations.

The ABS figures are retrospective, so market participants will be watching the market closely to see whether recent gains are sustained.

In the 2015 calendar year in part due to cooling macroprudential regulatory measures the Sydney auction market softened considerably in the lead up to Christmas, before limping over the line. 

There are still a dozen weekends to go yet this year.