Residex Repeat Sales index hints at easing housing market conditions in April.

The latest results from Residex’s repeat sales series shown house values moved 3.4% higher over the three months ending April 2017 while unit values were up 2.9%. The repeat sales method calculates the capital gain between sale pairs and as such inherently is unaffected by new property sales.

A summary of the latest Residex repeat sales series is below, together with median house and unit values across each of the capital cities.

Across the detached housing sector, every capital city recorded a rise in resale values over the three months ending April, except Perth where prices shifted half a percent lower. A similar trend was evident of the twelve months ending April, with Perth resale values falling a further 3.0%.

The unit sector has recorded a slightly weaker result over the past three months and year, with the national repeat sales index rising 8.0% over the past twelve months compared with a 10% rise in the resale value of houses.

Similar to other measures of housing market performance, the repeat sales series has shown an acceleration in the pace of capital gains over the second half of 2016 and into the first quarter of 2017. Results for April revealed a subtle weakening in the trend rate of growth, due to a softer reading over the month of April.

According to the repeat sales series, house values were virtually flat in Sydney over the month (-0.1%) with falls of 0.6% recorded in Perth and Darwin house values.   The resale value of units was more resilient over the month, with most cities recording a subtle rise, however the longer trends clearly indicate unit markets have generally recorded a lower rate of capital gain than houses.

The graphs below track the annual capital gain for houses across each of the major capitals, comparing the results from Residex’s repeat sales series with CoreLogic’s hedonic regression and the Residex median value series. Generally the direction of the capital gain trend is similar across most cites.

My view is that conditions in Sydney and Melbourne will continue to moderate due to less demand from investors, affordability barriers, and an overall weakening in housing related sentiment as well as the disincentive of higher mortgage rates and stricter credit policies from Australian banks.

The next few months of data should give a clearer indication about whether the housing market is slowing or the current softening of growth rates will be short lived.