Adelaide best performer Over the last year the Adelaide market has consistently been the top performer. The combined house and unit market increased in value by 28.16% over the last year. Adelaide house values have risen from $355,641 in January last year to $416,870 at the end of January this year - an increase of $86,799. Despite such strong value increases Adelaide houses are still the most affordable in the nation. Adelaide dwellings should continue to improve in value over the year, however it is difficult to see the rate of growth being maintained at this level. It is more than likely the Adelaide market will start to cool over the coming months as prices reach a critical level of affordability and growth recedes to more sustainable levels.
Brisbane and Melbourne value growth above 20% over the year Brisbane and Melbourne markets have been the second and third best performers based on annual change in dwelling values. Over the year Brisbane dwelling values increased by 23.34% and Melbourne dwellings values increased by 22.97%.
Sydney continues to improve The performance of the Sydney market has continued to improve. Last month the annual growth rate for Sydney dwelling values was 7.37%, this month the growth rate has increased again to 8.39%.
Perth remains relatively flat Perth value growth has remained in positive territory over the last twelve months, recording an increase in dwelling values of 0.84%. This rate of growth is a slight improvement over last month, however the quarterly results for Perth show a 2.01% decline in dwelling values in the three months ending January 2008. The poor performance of the Perth market is despite the fact that Western Australia has the highest population growth rate in the nation and the strongest economy of any state or territory. To put it simply, Perth housing prices are too high and rental yields are too low to be attractive to buyers.
Two tiered market becomes even more evident
The disparity between affluent suburbs and the mortgage belt continues to widen. This trend is most apparent in Sydney, where the affluent inner suburbs and metro coastal areas have recorded value growth mostly above 10% per annum. In comparison the outer fringes of the market remain very flat. We are seeing an emergence of this trend in the outskirts of Melbourne and the southern outer fringes of Perth also.
The factors behind this trend are simply that borrowing capacity has not been reached within the inner ring suburbs and coastal markets of Australia, while the mortgage belt areas are suffering from low demand due to affordability constraints. The white knight for these outer regions may be the return of investors during 2008. With rental yields in many of these areas now above 6%, these outer markets are starting to look very attractive to the investment market.
