Sydney and Melbourne apartment and house prices continue to surge over the latest quarter at 6.8 and 3.5 per cent, respectively, according to CoreLogic’s monthly house price index. This could have resulted from an interest rate cut in May and pre-election investment activity.
“A lot of growth was fueled through April and May, but Sydney’s June growth was exceptional after a moderating trend until early 2016,” said Tim Lawless, CoreLogic head of research. “We thought last year was the last hurrah, but there has been growth again. However, we’re not back to the frothy times of halfway through 2015 and we’re well below the peak of July last year.”
Though dwelling prices in both cities have increased by about 15 per cent over the year to June, Melbourne’s property price growth slowed.
“It’s a fairly new phenomenon, particularly as affordability is better in Melbourne and there isn’t the same barrier for home buyers,” Lawless said regarding Melbourne’s slower growth than Sydney. “We’re probably seeing the effect of some uncertainty around oversupply conditions permeating into the Melbourne market.”
Meanwhile, property prices fell in other capital cities except Hobart. Darwin was the weakest capital city over June, down 1.6 per cent.
Andrew Wilson, Domain Group chief economist, was not surprised with the Sydney and Melbourne results.
“Auction clearance rates increased in every capital city except for Melbourne, which was flat,” he said. “We would expect to see house price growth following these results.”
St. George senior economist Hans Kunnen expect continued stable growth, given the strong fundamentals of Sydney and Melbourne’s property markets.
“In Sydney, there’s population growth and a previous lack of supply that’s still behind demand,” he said. “While Melbourne may be experiencing some overall oversupply, the city has pockets that are undersupplied that are seeing growth.”
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