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Tuesday, 10 December 2019

Patchy recovery for housing in Q3

Patchy recovery

From peak to trough, Aussie capital city housing market prices fell by 8 per cent between 2017 and 2019, with some variation between the cities.

Although it was obvious anyway in real time, today’s official release at least puts to bed the conspiracy theories about the rebound being a bogus media construct, forged in cahoots with CoreLogic and Domain.

The solid rebound in residential property prices was, as expected, led by Sydney (+3.6 per cent) and Melbourne (+3.6 per cent) in the third quarter of 2019. 

Brisbane also saw a steady gain of +0.7 per cent, but there were declines in all of the other capital cities except for Hobart. 

The rebound was seen across both houses and units, but weighted average capital city prices remained -3.7 per cent lower than a year earlier by the end of September 2019.

The latest figures show that residential prices exactly doubled over the 16 years to Q3 2019, with capital city detached house prices (+107 per cent) outpacing attached unit prices (+79 per cent).

Sydney is the largest component of the weighted index, and prices remained lower year-on-year in September for both houses (-4.5 per cent) and attached dwelling units (-4.8 per cent), despite the rebound.

Unit prices tend to fare better in mature capital cities, and in Sydney's case there was only a modest difference between detached house prices (+91 per cent) and attached unit prices (+78 per cent) over the past 16 years of available data.

Units tend to achieve higher yields than houses, so net-net...a very similar outcome.

The preliminary estimate for the number of dwellings was about 10.4 million as at Q3 2019.

The total dwelling stock value increased by +2.8 per cent from $6.7 trillion to $6.9 trillion, driven by New South and Victoria.

This will see Australian household wealth per capita surging to record highs in 2020, with both Aussie and global stock market indices experiencing rollicking gains in 2019. 

Penultimately, Australia’s mean dwelling price increased from $645,200 to $660,800 in Q3, also driven by New South Wales and Victoria. 

Finally, the ratio of dwelling stock to GDP was back up to about 3.6x, having previously peaked at 3.8x. 

Of course, headline numbers only ever mean so much...

The wrap

Overall, there was the expected solid rebound in prices in Sydney and Melbourne prices in Q3.

That said, even within those cities the rebound was patchy (while prices were actually still falling in the other capital cities ex-Brisbane and Hobart).

Since the end of September, CoreLogic has reported further solid price gains in October through December, so a similar result can be expected in Q4.