Across individual capital city housing markets, the table highlights the weaker market conditions prevalent across all capital cities over the past five years. For houses, capital gains have been lower over the most recent five years than the previous five years across each city. For the unit market, Sydney is the only city that has recorded a superior market performance over the past five years compared to the previous five years.
Over the past decade, Darwin and Perth have been the standout performers for capital gains for houses, with this trend largely fuelled by exceptional growth between August 2002 and August 2007. For units, Hobart and Darwin have been the standout performers over the decade with the exceptional growth once again fuelled by the performance over the first five years of the decade.
Another important trend which has emerged over the past five years is the superior capital growth performance of units compared to that of houses. Across the combined capital cities, units have recorded average annual growth of 3.6% over the past five years compared to 2.2% growth annually for houses. Across individual capital cities, the unit market performance has outperformed that of detached houses over the past five years in Sydney, Melbourne, Brisbane, Perth and Hobart. This is most likely a response to affordability constraints present in the market and subsequently buyers seeking more affordable alternatives to detached houses.
This data highlights the significant increase in home values over recent years. The much more subdued growth in home values over the past five years is likely to be a better indication of how capital gains are likely to play out over the coming years rather than the exceptional value growth recorded over the first five years of the past decade.
This article first appeared on RP Data.
