Canberra home values record sluggish growth, according to CoreLogic RP report

Canberra home values have experienced 12 months of sluggish growth in a year that has seen the nation’s property market slip to a slower pace, according to a new report.

However, growth in the nation’s capital is expected to pick up by 2017.

The CoreLogic RP Data March Home Value Index, released on Tuesday, shows the annual rate of housing market capital gains has dropped to its slowest pace in 31 months.

Canberra was the third worst performing capital city after Darwin and Perth, recording year-on-year growth of 1.7 per cent. The other two cities recorded a slight drop in home values.

CoreLogic RP Data head of research Tim Lawless said the annual pace of home value appreciation across the capital cities highlights the slowing growth trend.

“The housing market has been losing momentum since July last year, when capital dwelling values were increasing at the annual rate of 11.1 per cent,” Mr Lawless said.

Mr Lawless said Sydney and Melbourne growth rates were returning to normal after a strong cycle of growth. However capitals that have underperformed in recent years, such as Canberra, could see growth rates increase.

“We are likely to see Sydney and Melbourne dwelling values continue to rise, at least on average over the 2016 and 2017 calendar year, however growth rates are likely to be substantially lower than what has been recorded over previous years,” Mr Lawless said.

“Some of the underperforming capitals, such as Brisbane, Canberra and Hobart may see some acceleration in their rates of capital gain by 2017.”

Mr Lawless said each capital city recorded a drop in rental yields, however Canberra’s rental market was stronger than the national average. The capital recorded a rental yield of 4.1 per cent for houses and 5 per cent for units.

Gross rental yields across all capital cities reduced from 3.7 per cent 12 months ago to 3.5 per cent in March.

Darwin and Hobart led the pack, each recording a gross house rental yield of 5.1 per cent. Melbourne and Sydney were the worst performers, with a yield of 2.9 and 3.2 per cent, respectively.

The poor performance of the larger capital cities could boost demand for investment property in Canberra.

” A low rental yield scenario in Melbourne and Sydney is likely to act as a further dampener to investment demand in these markets, as the prospects for capital gains becomes less certain,” Mr Lawless said.

“We’re likely to see many investors turn towards other housing markets where the outlook for capital growth is stronger, housing is more affordable and the yield profile is healthier.”