Historically, it is common that the February quarter sees subdued growth that is below the long term average, however it is unusual to see a negative result. Quarterly growth in the Australian house market was -0.04% overall in February, while the unit market suffered a loss of -0.32%
Of the 32 major housing markets, 18 slipped into negative growth for the quarter. Of the markets that achieved positive quarterly growth, it was mostly subdued rates of less than 1%.
Interestingly, Sydney, Melbourne and Brisbane saw a reduction in median house values in the February quarter. This is likely the result of tightened access to home loans, which has encouraged a more rapid onset of the downswing in the east coast markets.
Melbourne’s growth cycles typically see two or three growth surges during the upswing stage, so this quarter’s retraction could just be a short term fluctuation.
The greatest capital losses for the quarter were again seen in Darwin, where the median house value dropped -5.68% and units declined -5.02%.
The key to this market is recalling its small size. Sales volumes across the Darwin market (houses and units) dropped 23% for the year, however the change in the number of sales was a decline of just 469.
Surprisingly, house and unit values in country Tasmania achieved the highest quarterly capital growth rates. The median houses value increased by 2.68% in the February quarter, while units went up by 2.00% in the same time period.
To put the various housing markets in perspective, Figure 1 shows the estimated dollar value of each capital city residential real estate market as at February 2016. This was achieved by using the average sale price of houses and units in the year to February 2016, multiplied by the number of sales in the metropolitan regions for the year.
Figure 1: Value of Capital City Markets
Source: Onthehouse.com.au
Noting the small size of Darwin’s housing market – a hundredth of the value of Hobart’s housing market – enables understanding of the high growth fluctuations occurring in Darwin. Because the market is so small, big projects and investments have a large impact on the economy, population and subsequent demand for housing.
