1 March 2016

Low Interest Rates aren't the only Driver of Home Value Growth

It is generally believed that the current low interest rate environment has been the main driver of the recent growth in Australian home values. However, given the dramatically different performance of capital city housing markets, with Sydney and Melbourne consistently recording the strongest growth, it is clear that many other key factors are also extremely important.

Employment growth is one such key factor.

CoreLogic RP Data recently highlighted that between December 2008 and September 2015, more than two thirds (66.9%) of employment growth in capital cities and territories occurred in Sydney and Melbourne, including a larger proportion of total full-time job growth (74.2%). This may explain why home value growth has been much stronger in Sydney and Melbourne over recent years than in other capital cities.

Interestingly, full-time employment growth has recently ramped up in Brisbane and over the past year ending September 2015; 24,713 full-time jobs have been created in Brisbane compared to 26,036 since 2008

This strength in job creation for Brisbane may signal increased housing demand during 2016.

Source: CoreLogic RP Data; ABS

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