Just three of Australia’s capital cities are expected to experience higher capital growth in the New Year than they did in 2014.
Speaking about the outlook for Australia’s property markets in 2015, CoreLogic RP Data head of research Tim Lawless said only Brisbane, Adelaide and Hobart would perform better in 2015, with Brisbane a standout.
“Brisbane is one of only three capital cities where the annual rate of capital gain is likely to be higher this year than it was last year,” he said. “We are expecting the annual rate of capital gain to finish the year around seven per cent, compared with 5.1 per cent over the 2013 calendar year.
"With the rate of capital gain holding relatively firm over the second half of 2014, fewer affordability pressures and better rental yields than Sydney or Melbourne, we are expecting growth in Brisbane dwelling values to outperform the capital city average.”
According to Mr Lawless, Adelaide will also prove a stellar performer in the New Year.
“Despite uncertainty in the local economy, the Adelaide housing market is likely to finish the 2014 calendar year with a higher rate of capital gain compared with the 2013 calendar year,” he said. “We are expecting Adelaide values will have increased by approximately 3.5 per cent in 2014 compared with a growth rate of 2.8 per cent over 2013.
“Transaction numbers have been rising over the second half of the year, indicating a rise in buyer demand. Affordability pressures are relatively tame and rental yields are higher than what can typically be found in Sydney and Melbourne.
“While we're not expecting values to surge across Adelaide in 2015, a steady market, with values continuing to show a modest rise, is the likely outcome.”
Growth in Tasmania's capital is expected to be moderate, Mr Lawless said.
“The Hobart housing market has been the weakest of any capital city post-GFC. In fact, Hobart dwelling values remain 3.9 per cent lower than what they were at the beginning of 2009.
“More recently, housing market conditions have started to improve across Hobart. Transaction numbers have recorded a sharp rise from a low base and dwellings show a remarkable level of affordability compared to other capital cities. Gross rental yields are the second highest of any capital city after Darwin.
“Dwelling values are likely to finish 2014 about six per cent higher, and as demand from lifestyle buyers continues to rise, we expect Hobart home values to continue their moderate trend higher during 2015.”
Mr Lawless said Sydney was headed towards a more sustainable rate of growth.
“Housing market conditions [in Sydney] have been nation-leading over the current cycle, with dwelling values up by 31 per cent to date. The rate of capital growth is slowing down, though, after the annual rate of growth peaked in April last year at 16.7 per cent. By the end of 2014, we expect it will have slowed to approximately 12.5 per cent," Mr Lawless said.
“We expect the trend towards a more sustainable rate of capital gain to continue over 2015, due to national affordability constraints that are becoming increasingly evident ... as well as a reduction in investor demand, which will likely be attributable to the low-yield environment, as well as tougher investment lending requirements from the banks.”