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How Does Value Growth Over The Past Year Compare To The Previous Five Years?

Author: Cameron Kusher
Source: CoreLogic

We look at the change in dwelling values over the past year across the sub-regions of each capital city and examine how the performance compared to changes over the previous year and the average over the past five years.

SA4 regions are part of the Australian standard geographic hierarchy and in capital cities they typically have populations of between 300,000 and 500,000.  For this reason looking at data at this level provides more detailed insight than just looking at capital city figures. 
 
Across the capital cities there are 46 SA4 regions with the number across each capital city recorded at: 15 in Sydney, 9 in both Melbourne and Brisbane, 4 in Adelaide and 6 in Perth.  The capital city regions of Hobart, Darwin and Canberra are equivalent to an SA4 region.

Change in dwelling values over the past 12 months,
previous 12 months and annually for the
past five years across capital city SA4 regions to Nov-17

Over the 12 months to November 2017, six capital city sub-regions recorded value falls and all of these regions were located in Perth or Darwin.  While only six of these regions recorded annual value falls, 17 of these regions recorded value changes which were lower than at the same time a year ago.  Of the regions which have recorded a lower rate of value growth compared to the previous year, 7 are in Sydney, 2 are in Melbourne, 4 are in Brisbane and there are 2 each in Adelaide and Perth. Given this, more than half of the regions in each capital city except Adelaide have recorded stronger annual value growth this year compared to last.

The story is somewhat different if a comparison is done between value growth over the past 12 months and the compound annual rate over the past 5 years.  All 15 SA4 regions of Sydney have recorded value growth over the past year which is lower than the 5 year annual rate.  Elsewhere, the number of SA4 regions which have underperformed the rate of growth over the past 5 years over the past year are: 3 in Melbourne, 7 in Brisbane, 2 in Adelaide, 5 in Perth and Darwin.  Based on these figures, almost all of the regions of Sydney and Perth and more than half of the regions in Brisbane are underperforming relative to growth over the past five years.  

Data over a shorter timeframe (month and quarter) shows that values are now falling in Sydney, slowing in most capital cities and increasing moderately in Perth.  Given this, the data points to changing conditions over the coming year.  It is anticipated that in 2018, the rate of growth in Sydney and Melbourne SA4 regions will generally be slower than the pace of growth over the past 12 months.  In Brisbane, Adelaide, Hobart and Canberra growth is likely to be similar, potentially slightly softer in Hobart and a little stronger elsewhere.  Meanwhile, with the recent uptick in growth in Perth the performance next year could be stronger as the market emerges from an 11% correction.  Finally, Darwin values have continued to fall however, next year we could see Darwin follow the lead of Perth with the housing market moderately stronger.