Sydney and Melbourne set pace for house prices
House prices have continued to rise across Australia’s capitals, with Sydney and Melbourne again leading the way.
The CoreLogic Hedonic Home Value Index has seen a 1.1% rise across the combined capitals for the month of August, resulting in a year-on-year rise of 7%. Sydney and Melbourne were again the best performers, with Sydney prices rising 9.4% year-on-year and Melbourne values up 9.1%.
Canberra and Brisbane also saw strong year-on-year growth, up 7.6% and 6.5%, respectively. Brisbane saw a rise of 4.4%, while home values in Adelaide were up 3.1%. Perth and Darwin were the only capital cities to see a year-on-year decline, both down 4.2%.
CoreLogic researcher Cameron Kusher told finder.com.au the results continued to show a geographical disparity for house price performance.
“We’re seeing some reasonably strong growth in Hobart and Canberra, fed mainly by people in Sydney and Melbourne buying for investment or lifestyle. Coastal markets are also seeing strong growth, but most capital cities continue to lag behind, mainly due to the fact that the economies in those states are nowhere near as strong,” he said.
Kusher said in spite of continuing strong growth, the pace of house price growth was beginning to slow.
“It’s definitely growing at a slower pace than it was. If you look back at July last year, Sydney was growing around 18.5%. Last year growth in Melbourne peaked near 14.5%. It is cooling, but it’s going to take awhile to slow down,” he said.
Kusher said he didn’t expect to see the Reserve Bank’s August cash rate cut re-inflate the market.
“It might drag a few more buyers out of the woodwork, but overall I don’t think it’s going to have a massive impact,” he said.
Along with the rise in house prices comes a decrease in affordability. CoreLogic pointed to figures from the Australian National University which indicate the average household income to dwelling price ratio is now 8.4 in Sydney and 7.2 in Melbourne. Kusher said declining affordability was taking many first home buyers out of the market.
“What we have been seeing is a lot of people upgrading. It doesn’t make sense to be upgrading every two to three years because of stamp duty fees, so at some point, without first home buyers or a significant increase in investor activity you exhaust the number of buyers,” he said.