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Home values across the combined capital cities increased by 1.2 per cent in January 2014 according to the RP Data-Rismark Home Value Index. The rate of value growth over the month was slightly slower than the 1.4 per cent increase in December 2013 and highlights that housing market momentum from late 2013 has been carried in to early 2014.

Over January, each capital city experienced a rise in values except for Adelaide where they were unchanged and in Perth and Darwin where values fell. Over the three months to January 2014 combined capital city home values increased by 2.7 per cent. Over this period, home values have increased across each of the eight capital cities.

Combined capital city home values have increased by 9.8 per cent over the 12 months to January 2014. Over the year every capital city apart from Hobart (-0.2 per cent) has recorded a lift in dwelling values. Sydney (13.4%) and Melbourne (11.9%) have been the primary driver of capital gains over the current growth cycle. Value growth has been more moderate in Perth (6.9%), Darwin (4.6%) and Brisbane (3.8%) and significantly lower in Canberra (2.7%) and Adelaide (2.5%). Although the headline figures for capital growth are strong, the individual city-based data shows that the headline figure is largely being driven by strong growth in the two largest capital cities.

Breaking the results down into houses and units, it shows that annual value growth for houses has been stronger (10.1%) than that for units (8.0%).

The trend where houses are recording higher capital gains compared with unit markets is evident across every capital city except Perth over the past year. It will be interesting to see whether this trend is replicated in 2014 given that, based on median selling prices, units are $95,000 more affordable across the combined capital cities and as much as $214,500 more affordable in Sydney.

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