RP Data recently released their Home Value Index which traced home values for November. Home values rose 0.1% across the capital cities for the month of November. While this is a relatively benign statistic taken without context, there are a number of factors involved.
Inside the Statistics
While growth statistics are down for November last year, home values in the capital cities have grown 8.0% since November of 2012, and 8.3% higher since January of 2013. That constitutes the fastest annual growth rate in slightly over three years, since October 2010.
According to Cameron Kusher, Senior Research Analyst of RP Data, November’s slowdown represents a potential slowing in overall growth. Kusher feels that the peak of value growth, especially in Sydney at 12.5% and Melbourne at 6.6% over the last year, may have passed.
When the statistics are observed over a three month or quarterly period, every capital city saw gains except for Hobart at a loss of 4.7% and Canberra with a loss of 3.5%. However, quarterly results were mixed for other capital cities, with 5.8% in Sydney, 2.6% in Adelaide, 2.5% in Perth, 1.8% in Darwin and 1.5% in Melbourne.
Currently, Sydney and Perth are the only markets that have exceeded their previous peak values. While many see the slowdown in home value growth as a sign of impending stagnation, others think that a slower level of growth would be more sustainable and better for home affordability.
There was some other good news in the report; housing credit in the private sector rose by 5.0% in the year through October 2013, for the best 12-month performance since June 2012. Investors at 6.4% fared better than owner occupied dwellings at 4.3%.
The market time for a home is down 9 days over the last year at 41 days compared to 50. The current discount rate is 5.8%, compared to 6.6% last year at this time.
What It Means to You
Interest rates are low, the market is rising, but slowly enough that homes are still affordable and the market is active. Anyone who is thinking of buying should get the wheels in motion now and take advantage of the current situation before it changes.
Call (08) 9472 9766 today and talk to a Perth financial planner at Purely Finance.