The latest data and analysis of the Australian housing market by Residex reveals that 17 of our major dwelling markets recorded negative growth in the March quarter.

Table 1: February 2016 Summary

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Source: Residex

Residex analyst Eliza Owen said the surprising capital growth standouts were the ACT and Hobart – Australia's smaller and often forgotten cities.

Capital growth in ACT houses was a strong 6.39% in the year to March, while houses in Hobart grew a solid 4.82% during the same time period.

On a cyclical level, these movements are expected. Over the last decade, the ACT and Hobart house markets have generally experienced peaks and troughs just after Sydney (see Graph 1). Hobart especially had room for capital growth off the back of a cyclical trough, where annual growth was -9.13% in 2012.

Graph 1: Annual Growth Rates – Sydney, ACT and Hobart Houses

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Source: Residex

It is not clear why the housing markets move together, Residex analyst Eliza Owen said.

"It could be that as property becomes more out of reach during upswings in Sydney, investors spill over into the more affordable markets nearby.

"It could also be that increases or decreases in the Sydney market send signals to investors in other markets that it's a good time to buy or sell property.

"Given that Sydney is now coming into downswing, I expect that the ACT and Hobart will soon reach peak growth in their cycles."

There are also structural factors that have aided growth in these markets over the last 12 months, she noted.

In May last year, the federal government lifted a two year public service hiring freeze in Canberra, which increased job prospects and potential migration to the capital.

The Hobart dwelling market benefited from increased confidence in its economy, aided by a transition from mining to tourism, increased visitation from domestic and international tourists, and export subsidies from the federal government.