For October, conditions were flat across both the combined capital cities and the combined regional areas of Australia. 
However over the past twelve months growth in the capital cities (+7.0%) has outperformed the regional areas (+4.9%).
The slowdown in the pace of capital gains can be attributed primarily to tighter credit policies which have fundamentally changed the landscape for borrowers.
Lenders have tightened their servicing tests and reduced their appetite for riskier loans, including those on higher loan to valuation ratios or higher loan to income multiples.
We saw the housing market respond in a similar fashion through 2015, and the first half of 2016 as investors faced tighter credit conditions following the announcement from APRA that lenders
Of course, housing market conditions rebounded swiftly through the second half of 2016 once the investment related credit limits were achieved and the cash rate was adjusted lower in May and August last year.
Some cities, such as Brisbane, Adelaide, Darwin, Canberra and to a lesser extent Melbourne, are showing a substantial performance gap between houses and units.
While the pace of capital gains has slowed across most regions, some momentum is gathering across rental markets, however, rental growth has not been high enough to reverse the downwards trend in yields.
The national annual pace of rental growth has lifted from 0.9% a year ago to 2.8% over the most recent twelve month period. 
Considering national dwelling values were 6.6% higher over the past twelve months and rents rose by 2.8%, yields have compressed further over the past year and generally remain at or close to record lows in most cities
Financial markets have pushed expectations for a cash rate hike out to early 2019, implies that mortgage rates aren’t likely to rise materially over the foreseeable future.
With household debt at record highs, higher mortgage rates would test already stretched household balance sheets.
Labour markets have strengthened and population growth is underpinning housing demand, set against a backdrop of limited detached and semi- 
attached housing supply.
On the other hand, the future prosperity of the high-rise unit sector is less certain.
New unit projects that are positively differentiated and/or more geared towards owner occupier target markets rather than pure investment grade stock are likely to show a better performance.
The CoreLogic Settlement Risk Report continues to show that Brisbane’s inner city is facing the largest potential uplift in unit stock over the next two years, with some precincts facing the possibility of a 40-50% increase in total unit stock within 24 months.
Overall, performance across Australia’s housing market remains as diverse as ever.
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