Happy New Financial Year….
Another busy Financial Year has come to an end and I can’t believe we are already in July. So how has the housing market performed over the 2013-2014 financial year?
This year has seen Australia one again with a strong economy and according to the Housing Industry Association, it is because of a big boost from new home buildings.
New residential construction recovered over the course of the year and some parts of the retail manufacturing and supply distribution sectors have reaped from the increased demand.
Without the recovery of the new residential construction sector, the state of the economy may have been a very different story!
Over the year, we have also seen the economy begin transitioning away from mining related investment towards more domestic focused activity.
This is evident with resource driven markets seeing lower commodity prices and significant infrastructure projects in mining and resource sectors winding down.
In regards to capital city home values, values in every capital city have seen an improvement with an average rise of 10.1 percent.
It is also interesting to note that June marks the two year anniversary of the current growth phase, where capital city real estate values broadly started increasing (in June 2012).
In terms of capital gains, the top three cities are Sydney, Melbourne and Brisbane.
Sydney leads the pack with values moving almost 15.4 percent higher and a median dwelling price of $690,000.
Next is Melbourne with dwelling values up 9.4 percent and a median dwelling price of $560,000.
Brisbane is the third strongest market with values up 7.0 percent. Over the year Brisbane had been a sedate market but is now gathering momentum with a median price at $455,000.
This financial year has also seen the RBA hold firm on interest rates and it is predicted it will continue into the next financial year.
There is consensus that there could be a modest increase next year (mid 2015) but overall it wouldn’t be a surprise if they stayed the same.
The low interest rates are supporting increasing property values; however the pressures on housing affordability could slow buyer demand.
Rental yields in Melbourne in Sydney have reduced substantially, and could see investor demand migrate away from these two capital cities to where the rental yields are stronger and the growth cycle hasn’t peaked.
Conversely Darwin continues to show the highest gross rental yields at 6.1 per cent for houses and 5.9 percent for units.
Overall, the Australian property market has been strong and seems that it will continue, with some markets either correcting or softening.