12 Nov Dwelling values fall further – Geoff White
Dwelling values continue to fall across Sydney, Melbourne, and Perth in October, pushing the Core Logic National Hedonic Home Value Index further into negative territory. Geoff White from Core Logic joins us to look at each of the capital cities and the regions.
Kevin: Well, dwelling values continue to fall across Sydney, Melbourne, and Perth in October, pushing the CoreLogic National Hedonic Home Value Index further into negative territory. We’ll have a look at each of the capital cities and look at the regions as well in this report. Welcoming in to the show, Geoff White from CoreLogic. Geoff, thanks very much for your time.
Geoff: Thanks, Kevin.
Kevin: Some sobering news for the cap cities, particularly Sydney and Melbourne, but Melbourne seemed to be suffering a little bit, oh no actually yeah, Melbourne a little bit more so in the quarter than Sydney.
Geoff: Yeah, such right Kevin, over the last quarter Melbourne pipped Sydney by point one, so a negative 2.1% in Melbourne and Sydney negative 2.0. But over the course of the last year Melbourne is negative 4.7 compared to Sydney’s negative 7.4 so Melbourne’s sort of had a bit of a delayed reaction to this adjustment in the market and these statistics seem to show that.
Kevin: Even more sobering for investors too if you look at total return, coming back by 4.2% in Sydney. It’s interesting to note, too, that the Brisbane market still, while’s no real growth reflected in these figures, it’s probably one of the most stable markets in Australia.
Geoff: Yeah, that’s right. Brisbane really hasn’t changed all that much even over the year, I mean .4% but bearing in mind what’s going in Sydney and Melbourne, that’s pretty good. Also, Adelaide’s done very well as well where there’s been some growth but nothing tips what’s going on in Hobart, it’s just going from strength to strength with annually a 9.7% increase in Hobart.
Kevin: While we had a good increase in Canberra for the quarter, it’s still annually it’s been about 4.3% but the other interesting point I wanted to pick up on and it’d be interested to get your take on this too, Geoff, is Hobart. We’ve heard a lot about the growth in Hobart and certainly in the last twelve months this report says 9.7% but I notice that’s starting to slow down a little bit.
Geoff: Yeah and I think that’s probably in some ways that’s a good thing because unsustainable growth, and it could be argued that it has been that over the course of the last few years, but certainly it has slowed in recent months. So we are not seeing the growth that we did see say six months ago on a month by month basis, so that’s still showing positive and even in the last month it was .9%, so there’s still growth in Hobart, but it has been slowed. And I think that’s not a bad thing, to be honest, Kevin.
Kevin: Continuing to look at the front page of your report, the highlights over the three months to October 2018, we’ve already said that the best performing capital was Canberra, 1.5%. Give me the weakest and other highest showings in the report, Geoff.
Geoff: Yes, the weakest performing capital city has been Melbourne, as we said, with a negative 2.1%. On the yield side, we’ve seen Darwin showing the best yield and rents have been quite strong in Darwin and values haven’t been as strong so the rental yield in Darwin 5.7% and the lowest yield, Sydney, 3.2%. Sydney and Melbourne are very close in terms of yield and they are quite low so that’s sort of the highlights over the last three months. Three months is a good yardstick to look at these because you start to see some trends. That’s in the latest report there, Kevin.
Kevin: Yeah, and looking at Darwin you mentioned the best return, highest improver, that’s on the back on the fact that it has the lowest median, I think one of the lowest medians, just slightly ahead of Adelaide, in Australia actually.
Geoff: That’s right, median value in Darwin is 433,000 so rents are pretty good in Darwin if you’re an investor. You’ll get some yield there and your investment to buy into Darwin is not anything like the likes of Sydney or Melbourne or Brisbane.
Kevin: Yeah, and you’d have to look at units if you’re looking at Darwin of course with the median there of 312,000 and a return of 6.4%, that’s a pretty good return.
Geoff: Yeah it is, that’s right, exactly. If you’re chasing a good return on your investment you couldn’t overlook Darwin as being one to look at and the capital growth probably will start to turn once there’s more demand.
Kevin: Absolutely, for sure. Let’s have a quick look at the regions, some outstanding regions, and you and I’ve talked in a separate show about Latrobe in Gippsland, and how that’s a fairly consistent performer in the growth stakes. If you look at the regions overall, the top ten and the bottom ten, it always seems to come in the middle there with growth of around 9.2%.
Geoff: Yeah, that’s right. So the top ten range from 4.7% right up to 11.6 and Latrobe Gippsland sitting pretty much in the middle there at 9.2. That’s a good region and Geelong has also been very strong and that’s had a- we’ve spoken about that market at 10.9%. Also, some would argue is not so regional nowadays, but Tasmania very strong in the regions as well. That’s just generally the demand in Tasmania. It is a lot of good news in terms of Tasmania, Victoria, and particularly some of the regions in New South Wales with the Hunter Valley and Richmond, Tweed, New South Wales, where there’s been 4.8 and 5.1%. So yeah, there are some good stories there but we’ve also got the bottom ten, that don’t look as pretty.
Kevin: Yeah, well outback Queensland coming up by 11.1%. But just getting back to Tasmania for a moment, we mentioned earlier in this report that the Hobart market seems to be slowing down a little bit but it’s rippling out to the regions. If you look at the best performing regions, the top three are out of Tasmania.
Geoff: Correct, that’s right. And I think that’s because capital cities just generally seem to push people into the regions based on affordability and the rest of Tasmania excluding Hobart has had 11.4% growth over the last twelve months. That’s a very strong number and Victoria second at 7.1%. They’re the two regional areas of Australia that seem to be performing very well.
Kevin: Well, there it is, that’s the National Hedonic Home Value Index from CoreLogic and you can get a copy of that. We’ll make sure we publish that below this interview so jump down, have a look at that. Geoff White from CoreLogic, thank you so much for your time Geoff.
Geoff: Thank you, Kevin, talk again soon.