The 2014-2015 financial year has seen steady growth in the housing market with combined capital city home values rising by 7.5 per cent, but weakness persists in Perth and Darwin, according to the CoreLogic RP Data Home Value Index.
The index is weighted based on the number of dwellings in each capital city in Australia.
The index suggests that Sydney has been the engine of growth, followed by Melbourne, with both cities recording value rises of more than 4.5 per cent. These two cities are the biggest beneficiaries of both interstate and overseas migration, and receive the highest levels of interest from offshore investment.
Meanwhile, other capital cities have recorded very little growth despite historically low interest rates.
CoreLogic research analyst Cameron Kusher said after three years of strong value growth in Sydney and Melbourne, growth in the housing market could be expected to continue. However, he said the rate of growth should “start to slow” to a more sustainable level over the year.
“We are already seeing signs of growth in other markets around the country particularly areas like Newcastle and Wollongong adjacent to Sydney as well as certain pockets in Brisbane and the Gold and Sunshine Coasts, and we expect to see further pick-up in growth in these areas.
“We also expect the dramatic differential in affordability in these areas relative to Sydney and Melbourne will drive more buyers to these areas,” Mr Kusher said.
While interest had increased in some regional areas, there are still signs of weakness in Perth, Darwin and other regional markets linked to the resource sector. The property markets in these cities have been characterised by falling home values and rental rates, declining sales, increasing discounting levels and time on market and an increase in properties available for sale.
“Weakness in mining areas like Perth and Darwin is likely to persist,” Mr Kusher said, indicating that housing conditions across Australia are likely to remain mixed over the next 12 months.