Employment and its link to the housing market
The close relationship between increased job opportunities and the housing market for a particular city was explored in new data released by CoreLogic RP Data.
Data research analyst Cameron Kusher of CoreLogic RP Data gave his take on the data, believing that home ownership is “generally underpinned by secure employment”.
“Low interest rates have been a key driver for recent growth in home values; however, growth in dwelling values has been narrowly based geographically whereas interest rates are the same across the country. Given this, there is clearly more to current housing conditions than low interest rates with employment the key driver,” Kusher said.
In 2008, combined capital city home values fell by 6.1%, from March to December, stimulated further thanks to cuts in interest rates and the First Home Owners Grant Boost. Combined capital city home values started to rise since.
When values started increasing across the board, Sydney and Melbourne consistently posted the strongest growth in home values. Perth, Canberra, and Darwin have also seen short periods of strong value growth.
With capital growth values varying wildly among the states, CoreLogic concludes that there is more to capital growth performances than just the low interest rate.
Between December 2008 and September 2015, most of the country’s employment growth was centred in Sydney and Melbourne, representing 66.9% of the nation’s employment growth. More importantly, the two cities have attracted the largest proportion of new full-time jobs, at 74.2%, with part-time jobs at 61.8%.
Since 2008, the Northern Territory was the only region wherein its full-time employment growth rate has been relatively greater than its part-time employment growth.
“Although the rate of full-time jobs growth was lower in Sydney, it along with the NT have been the only two regions that have recorded a greater total increase in full-time employment than part-time employment since over the past 12 months. It is an obvious statement but full-time employment growth would seem to be more important than part-time as it means the employee is working more and in most cases earning more money which is in turn more conducive to home ownership,” Kusher observed.
Over the past 12 months to September 2015, both Sydney and Melbourne have continued to produce the largest proportion of jobs. Regions nearest to these two cities have noticeably improved in terms of employment.
“While job creation isn’t necessarily the be all and end all of housing demand it is an important component to consider. It certainly goes some way to explaining why home value growth has been much stronger in Sydney and Melbourne over recent years than in other cities. The recent relative strength in job creation in Brisbane and Hobart may signal increasing housing demand in those cities over the coming year,” remarked Kusher.