House prices continue to rise in 2017 as Sydney records 1% January increase

Extract from The Guardian 

CoreLogic home value index finds media price in Sydney climbs to $970,000 for houses and $725,000 for apartments, while Melbourne prices also jump

The CoreLogic home value index found prices rose 1% in Sydney in January and 0.8% in Melbourne. Photograph: Tracey Nearmy/AAP

Guardian staff

Wednesday 1 February 2017 15.25 AEDT 

House prices across Australia continued to rise in 2017 with Sydney leading the charge.
Homes in Australia’s most expensive city rose 1% in January to a median price of $970,000 for houses and $725,000 for apartments, according to the CoreLogic home value index released on Wednesday.
Melbourne closely trailed Sydney with prices increasing 0.8% to a median of $711,000 for houses and $510,000 for apartments.

Dwelling values across all capital cities rose by 0.7% on average over the first month of the year. Darwin was the only underperformer, recording a fall of 1.7%.
Tim Lawless, CoreLogic’s head of research, said: “The positive result was broad-based with every capital city, excluding Darwin, recording a rise in dwelling values over the month.”
The January result caps off 12 months of strong price rises in Melbourne (11.8%) and Sydney (16%). Since June 2012, the cumulative increase in house prices has been 70.5%, according to the report.

Prices in Hobart rose 1.4% in January, 5.8% over the quarter, taking the annual increase to 7.8%.
“Clearly the Hobart housing market is now well into its growth cycle,” Lawless said.
Strong housing market conditions were being driven by affordable housing, improved economic conditions and stronger migration trends in Tasmania, he said.

Perth and Darwin showed some signs of recovery over the quarter (2.8% and 1.8% respectively) but experienced further declines in January.
Lawless said the quarterly rise suggested that the falls experienced there since the end of the mining boom in 2014 could have bottomed out.
“Buyers still have a great deal of leverage in these markets, with listing numbers remaining high, long selling times and high rates of discounting,” he said. “However, in another indication that conditions may be moving through the bottom of the cycle, transaction volumes moved higher across both markets prior to the seasonal downturn in December and January, whilst the average selling time reduced from previously higher levels.
“With economic and demographic conditions remaining weak in these markets, a recovery in dwelling values is likely to be a slow process.”

Lawless said that although growth rates were expected to moderate throughout 2017, the issue of housing affordability was likely to become more pressing, particularly in Sydney, where the dwelling price to income ratio was approaching 8.5 times.
The size of the deposit needed and stamp duty were also acting as significant barriers to first home buyers, he said.

Rising prices in Sydney and Melbourne have led to calls for the scrapping of negative gearing and capital gains tax concessions to improved housing affordability. However, the Coalition has repeatedly ruled out making changes, with Malcolm Turnbull recently instead blaming lack of supply on the housing affordability crisis in big capital cities.
Turnbull said people “particularly on the left” tended to overlook that “the reason housing affordability has deteriorated is demand has consistently exceeded supply”.
The federal treasurer, Scott Morrison, recognised housing affordability as a problem in a major speech in October but has so far only canvassed supply-side policies including encouraging states to release more land.
The new premier of New South Wales, Gladys Berejiklian, has said that increasing housing supply will be one of her top priorities but has not detailed any additional land releases or changes to zoning laws.
“The average person that lives in Sydney, if they want to buy a house in Sydney, that shouldn’t be out of reach for them,” she said.