According to the latest RP Data-Rismark Home Value Index, capital city dwelling values have shown a 1.4 per cent capital gain over the month of June 2014, with all cities apart from Adelaide and Darwin recording a rise in dwelling values.
RP Data research director Tim Lawless stated that the strong result has partially reversed May's 1.9 per cent fall and results in a -0.2 per cent decline in dwelling values over the June quarter.
Over the 2013-14 financial year the top performing cities for capital gains have been Sydney and Melbourne where dwelling values are up 15.4 per cent and 9.4 per cent respectively across each city. The Brisbane housing market, where conditions have generally remained relatively sedate, is now gathering some pace with dwelling values moving 7.0 per cent higher over the past twelve months, the third strongest result of any capital city.
Over the current growth cycle which started at the end of May 2012, capital city dwelling values are up 15.5 per cent, with Sydney recording the most significant capital gain of 23.1 per cent.
According to Lawless, the recent volatility in the month-to-month Index reading is likely to be a seasonal factor.
"The last time we saw a negative quarterly movement in our combined capital city index was May last year. The recent reduction in capital gains is likely a correction from the strong market conditions reported over the first quarter of the year," said Lawless.
"Looking through the monthly movements, the trend in performance is much more important. It shows that the quarterly rate of growth peaked across the Australian housing market in August last year at 4.0 per cent. Since that time the rate of capital gain has generally trended towards a more sustainable level. The slowdown in dwelling value appreciation will be a welcome relief to policy makers and those seeking to buy into the housing market."
The June RP Data Rismark Hedonic Home Value Index finished the financial year only slightly into double digit growth figures, with capital city dwelling values moving 1.4% higher for the month after posting a 1.9% decline in May.
"With interest rates remaining low for the foreseeable future, it is doubtful that housing values will start to slide, at least not at a macro level. What is more likely is that natural affordability constraints will start to dent buyer demand, as will the low rental yield scenario's that are very much evident across the largest capital cities of Melbourne and Sydney," said Lawless.
Other indicators such as clearance rates are holding relatively firm which, according to Mr Lawless, further reinforces the notion that the housing market isn't set to show a market correction.
"Activity across RP Data valuation platforms has also held firm at relatively high levels suggesting mortgage demand isn't dropping off just yet," concluded Lawless.