Capital city dwelling values rose a further 1.4% in February, with Sydney continuing as the overall capital gains leader.
The strong capital gain over February was led by Canberra (+3.2%) and Sydney (+2.6%).
In Sydney, where the annual rate of growth is now 18.4%, this is the highest annual growth rate since the twelve months ending December 2002 when the housing boom of the early 2000’s started to slow.
Since capital city dwelling values started to rise in June 2012, dwelling values have increased by a cumulative 47.3%, ranging from a 74.9% capital gain in Sydney.
The strong growth conditions across Sydney have provided a substantial wealth boost for home owners, however, the flipside is that housing costs are becoming increasingly out of reach.
Affordability challenges are most pronounced across the Sydney housing market where, based on September 2016 data, dwelling prices are almost 8.5 times higher than gross household incomes.
Sydney has shown the most significant compression in rental yields over the past five years, with the average gross yield reducing by 150 basis points to reach 2.9% (2.7% for houses and 3.7% for units).
The latest housing finance data from the Australian Bureau of Statistics indicates that investors comprise approximately 57% of new mortgage demand across New South Wales (excluding refinanced loans).
This is substantially higher than the long run average, which is slightly above one third.
According to CoreLogic auction results, 2017 began on a very strong footing with capital city clearance rates generally tracking in the high 70% to mid-80% range from week to week.