Home price rises might be slowing, but if you’re looking for a place in Sydney it’s going to cost you a median price of three-quarters of a million dollars.
Capital city home values were up 0.9 per cent in December, and were up 7.9 per cent in 2014, according to the CoreLogic RP Data home value index.
Sydney led the way with prices up by a whopping 12.4 per cent in the year, but were flat in December. That was closely followed by Melbourne, with an 11.3 per cent gain for the year and were up 1.6 per cent in December.
Sydney was the most expensive city to buy a home, with a median price of $730,000, almost double the $341,500 recorded in Hobart.
RP Data senior research analyst Cameron Kusher said despite the strong result the pace of home price growth continues to slow.
“The slowing annual growth rate is further evidence that the housing market is losing some steam with combined capital city home values increasing by 9.8 per cent over the 2013 calendar year compared to a more moderate 7.9 per cent increase in 2014,” he said.
“Auction clearance rates reduced noticeably across the two largest auction markets, Sydney and Melbourne, over the final two months of the year.”
CommSec chief economist Craig James said the housing market is cooling because there are more homes being built.
“As a result, home prices are growing at a slower rate. In fact annual growth of home prices stands at a 14-month low,” he said.
“The growth rate of home prices is easing to more sustainable levels, not a boom and not a bust.”
Mr Kusher said while home values are still rising, rental growth is sitting at its lowest annual rate over a decade, with capital city rents rising by 1.8 per cent over the past 12 months and he expects it to stay sluggish in 2015.
“Affordability hurdles in Sydney, and to a lesser extent in Melbourne, are making it increasingly difficult for some buyers to enter the market,” he said.
“Additionally, low rental yields and the likelihood of tougher lending criteria to investment buyers will likely dampen the very active investor segment of the market which may in turn reduce housing demand in 2015.”