Home values stabilise as busy Spring auction period commences

Home values have stabilised as we enter the Spring auction period, with the RP Data CoreLogic Home Value Index posting a 0.1% capital gain across the combined capital cities for September.

Despite the flat overall result, five of Australia's capital cities actually recorded a fall in values, whilst only Sydney (+0.8%), Brisbane (+0.7%) and Adelaide (+0.9%) recorded an increase during the period.

The relatively flat figure comes at the end of a quarter of high growth, with the value of capital city residential properties increasing by 2.9% over the September quarter.

RP Data’s research head Tim Lawless said that the figures are good news for those wanting to buy property over Spring.

"A moderating annual trend, as well as the relatively flat September result, is likely to be welcome news to policy makers and potential buyers after the winter months recorded the largest capital gain since 2007,” Lawless said.

"The softer September result is also likely to be seen as a positive indicator by the Reserve Bank which has recently raised concerns about the level of value growth and speculative investing in the Sydney and Melbourne housing markets.”

The impact of the slowing growth has already been felt in Melbourne, where auction numbers for the September quarter of 2014 have set a new all-time record. According to the Real Estate Institute of Victoria, around 8,165 auctions were held in the city in the past three months, 15% more than were held during the September quarter of 2013.

Lawless said it is concerning that we have now seen the ratio of housing debt to disposable income reach a record level at 137.1%. In addition, there are substantial investor concentrations within the two largest capital cities, particularly in inner-city unit markets.

While this is true of the Melbourne market - where the majority of auctions occurred in inner and middle city areas - there were also strong auction clearance rates over the last quarter in outer suburbs such as Dingey Village and Wantirna South (both 96%).

The shift showed investors are thinking about where to put their money, and realising that the inner city isn’t always going to offer the best return.

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