On a quarterly basis, Brisbane has seen the greatest falls at 2.2% over the quarter whilst the greatest increase in values was witnessed in Darwin at 6.2%. Darwin continues to record strong value growth following on from its very strong performance during 2008. Adelaide on the other hand, was the only other capital city market apart from Darwin to record positive growth through 2008 however, values in Adelaide have now fallen 1.5% during the quarter. Property values in Perth appear to have slowed their rate of descent after falling by 7.3% during 2008, the last 3 months has seen falls of just 1.0%.
When looking at values throughout the nation, houses in Sydney remain the nation’s most expensive sitting at $559,363 and the cheapest houses are found in Hobart where the median price is $295,000. Perhaps the most interesting movement in house values during recent times has been the rapid increase in Darwin house values. At the start of 2008, Melbourne house values were 7.5% more expensive than Darwin’s and Brisbane’s median house was 8.6% more expensive than Darwin’s. As at the end of Feb-09, Darwin’s median house value is 2.7% greater than Melbourne’s and 6.1% greater than Brisbane’s. Although this may seem expensive, Darwin continues to provide the country’s best gross rental yields so whilst yields are so strong, it is logical that price growth is likely to remain robust.
Across the unit market, the most expensive units are found in Perth ($445,367) and the most affordable units are located in Hobart ($243,000). Units in Perth have been the nation’s most expensive for some time now, overtaking Sydney in May 2006. The result is unsurprising given the quantity of unit development located on or close to the waterfront on the Swan River and coastal areas. Generally, these units have been constructed with a strong focus towards the owner occupier market and prices reflect such an offering.
Even though values have started to show some growth in capital city areas we don’t anticipate that growth in values will be dramatic through 2009, overall we believe it will be a fairly flat year in terms of growth. However property investment in Australia has demonstrated it resilience during 2008. When global share markets and global property markets were tumbling dramatically, Australian property values fell by less than 3%.
It’s important to remember that property is generally held for at least 5 years and that any decline in value is only relevant if the owner sells or is looking to refinance. A good example is, if you bought the median house in Melbourne in February 2003 (towards the end of the last boom) you would have paid $328,567. As at February 2009, Melbourne’s median house sits at $452,072 which is a value increase of $123,505 over six years or annual average growth of 5.5%. If you compare this to the S&P/ASX 200 index, the share price index sat at 2,801 during February 2003, at the end of February 2009, the index sat at 3,345, representing an annual average change in the S&P/ASX 200 index value of just 3.0%. Sure share prices were at record highs but the volatility of the market has seen share values fall dramatically and rapidly. What this demonstrates is that property as a long-term asset class has outperformed the share market and has seen far less price volatility.
RP Data Sourced