The national housing market has recorded a slight decline in median house and unit values over August 2016 according to the Residex median value index. The falls in median values have been fairly broad-based across the country. The August figures are detailed in Table 1 below (note that Residex median values are non-revisionary and are published monthly. The methodology used to calculate median values is different to Residex’s quarterly repeat sales index).
Table 1: August 2016 Median Value Index
Across the nation, median house values fell by 0.86% in August and unit values declined by a very similar 0.87%. While most regions have recorded a decline in median values in August, it is quite a different picture over the past 12 months.
Median house values have increased over the 12 months to August 2016 in most regions of the country and are 6.58% higher nationally. In comparison, seven of the 16 regions published in Table 1 have recorded a fall in median unit value over the past year. Nationally, median unit values have increased by 2.91% which is less than half the rate of growth of in house values.
When we look at the median house and median unit data over time, it shows that house and unit values are now below their peak in all regions. The magnitude of these declines varies significantly on a region-by-region basis as well as across different property types.
Graph 1 below highlights the magnitude of decline in median house values from the respective market peaks across the capital cities and nationally.
Graph 1: Change in median house values from their respective peak to August 2016
Across the country, median house values are 0.9% lower than their previous peak. In terms of the greatest declines from peak, they have predictably occurred in the regions which have the greatest exposure to the resources sector. Regional Western Australia has been hardest hit with median house values 22.6% lower than they were at their peak. Perth, Darwin and Regional Northern Territory house values have also recorded substantially falls from their respective peaks, down 8.8%, 9.5% and 7.9% respectively.
In all other regions analysed, the decline since the market peak has been less than 5%.
Graph 2 following highlights the decline from the respective market peak to August 2016 for median unit values across the major regions of the country.
Graph 2: Change in median unit values from their respective peak to August 2016
The results show a similar picture to what has unravelled for housing, with those regions linked closest to the resources sector having recorded the greatest value declines. At a national level, median unit values are currently 0.9% lower than their peak which is an equivalent decline to that recorded for houses. The regions with the largest overall declines in median unit values have been: Regional Western Australia (15.1%), Regional Northern Territory (14.1%), Darwin (13.7%), Perth (11.3%) and Regional South Australia (8.4%).
Across most regions of the country median house values have recorded more moderate overall declines than units however, there have been a handful of exceptions. In Sydney, Melbourne, Brisbane and Regional Western Australia, the overall decline in median house values have been greater than median unit value declines.
The National Accounts for the June 2016 quarter have been released over the past month. The national accounts showed that over the quarter, gross domestic product (GDP) which is a measure of the economic output of the country, increased by 0.5%. As a result, GDP increased by 3.3% over the 12 months to June 2016. Although headline GDP was quite strong, GDP per capita, which measure output per person, increased by a much lower 2.0%.
The latest unemployment data showed that in August 2016, the national unemployment rate was recorded at 5.6% which was its lowest reading since July 2013. While at a headline level it looks like an encouraging read, the lower unemployment rate did hide some additional indicators of concern for the labour market. While the number of employed persons has increased by 1.6% over the past year, full-time employment has increased by just 0.4% compared to a 4.1% increase in part-time employment. The heightened growth in part-time employment wouldn’t necessarily be of concern if employees were happy to be working part-time, the quarterly data on labour force underutilisation shows that 14.3% of employees were underutilised. What this means is that 14.3% of the labour force are willing and able to work more hours than they are currently. The rate of labour underutilisation is at close to a record-high level.
Market Analyst for Onthehouse.com.au.