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Capital city values on the rise

Capital city dwelling values climbed 1.9 per cent over the month of July, according to new research.

RP Data’s July Hedonic Home Value Index Results found the 1.9 per cent capital gain takes the cumulative recovery to 6.5 per cent since dwelling values found their trough at the end of May last year.

The July results also take the rolling quarterly change in capital city dwelling values to 2.3 per cent over the three months ending July. According to RP Data research director Tim Lawless, despite the strong headline, the market remains somewhat of a mixed bag.

The housing market is being buoyed by very positive conditions in Sydney, Perth and to a lesser extent Melbourne, with residential values in these cities now 3.7 per cent, 4.4 per cent and 2.4 per cent respectively higher over the past three months alone. At the other end of the scale you have cities like Adelaide, Brisbane and more recently Darwin where conditions are more sedate with dwelling values slipping lower over the past quarter.

By including rental yields in our assessment of the housing market, some clarity is provided as to why investors are becoming so active. The RP Data-Rismark Accumulation Index, which factors in both capital gains and gross rental yields, is up 9.4 per cent over the past year. As noted by RBA Governor Glenn Stevens earlier this week, with an easing in monetary policy one of the expected and intended effects will be that people start to shift their portfolios away from the less risky assets such as cash and in the direction of holding equities and physical assets such as property.