Sydney and Melbourne lead home value growth

Sydney and Melbourne lead home value growthThe latest RP Data CoreLogic Home Value Index shows the combined capital cities recorded a 1.0 per cent capital gain in the month of October, with Sydney and Melbourne leading the way.The October data helped bolster results for the last three months, which show that dwelling values rose 2.2 per cent in spite of a slowdown in growth in September.Only three capital cities recorded value rises over the month, with Melbourne (1.9 per cent), Sydney (1.3 per cent) and Brisbane (0.6 per cent) all returning positive figures. Hobart and Canberra experienced the largest fall in dwelling values over the month, recording -2.4 per cent and -2.3 per cent respectively.Sydney was the standout performer for the three months to October, recording an increase in dwelling values of 3.9 per cent. It was one of only four capital cities to record an increase in values for the period, with Adelaide (2.1 per cent), Melbourne (1.9 per cent) and Brisbane (1.3 per cent) all showing growth.Tim Lawless, RP Data’s chief economist, said the result highlighted weaker housing market conditions outside of Australia’s largest cities.And he said the rate of capital growth is continuing to moderate. “Home values across the combined capitals have increased over the 12 months ending October 2014, which has slowed from a peak of 11.5 per cent in April of this year,” said Lawless All the capital cities have recorded an increase in home values over the past year despite the annual rate of growth continuing to trend lower.Sydney home values were 13.1 per cent higher, Melbourne 8.9 per cent, Brisbane 5.6 per cent and Darwin 5.0 per cent. Growth was more subdued in the other capitals, with Hobart recording 4.4 per cent, Adelaide 4.3 per cent, Perth 3.4 per cent and Canberra 0.9 per cent.The rise in dwelling values compared with dwelling rents (up 1.8 per cent over the year for the capitals combined) has been compressing yields. Sydney’s average yields are at 3.7 per cent and Melbourne’s are at 3.3 per cent.According to Lawless, capitals with lower or falling price growth, particularly Darwin and Hobart, had “a much healthier yield profile, with the typical dwelling providing a gross yield of 5.4 per cent and 5.9 per cent respectively”.Find more on the RP Data CoreLogic report here