According to CoreLogic’s April 2017 housing market update, capital gain conditions across the housing market has continued to grow with capital city home values rising by a further 1.4% in March to be 3.5% higher over the first quarter of the year and 12.9% over the past twelve months. The annual growth was the highest since May 2010.
House prices have been surging higher since the middle of 2016 when the cash rate was lowered by fifty basis points and investment demand started to rebound after slowing through most of 2015 and the first half of 2016. In Sydney the annual rate of growth jumped to almost 19%. This was driven by broad factors including the strong jobs market, which is reflective of the buoyant services and construction sector, and the large number of investors that are adding to housing demand.
Over the past twelve months, New South Wales and Victoria have accounted for just over two thirds of the nation’s population growth.
The long term average suggests the ‘normal’ share of population growth in these two states is about 51%. Such strong population growth is a significant contributor to housing demand.
The past five years has seen New South Wales and Victoria comprise three quarters of the national number of jobs created.
The long term average is a substantially lower 55%.
Finally, investment across New South Wales, and to a lesser extent, Victoria, is substantially higher than in other states. Based on January data from the Australian Bureau of Statistics, investors were responsible for almost 60% of housing finance commitments, excluding refinanced loans, across New South Wales and 46% across Victoria.