House prices across Australia continue to soar beyond expectations boosted by the ongoing resource boom in Western Australia and the Northern Territories.
The Australian Bureau of Statistics said that house prices around the country grew by 2.2% in the June to September quarter, exceeding analysts' forecast of 0.9% growth. In the year to September, house prices rose by 9.5%.
Perth notched up a whopping 46% increase in prices for the year while Darwin climbed 17.3%. All other cities posted strong gains, with the exception of Sydney where house prices only managed a modest increase of 1.4% for the year. However, this incremental gain has brought the city back into positive territory.
"The return of Sydney into positive growth leads us to believe that the Sydney market is now leaving the worst behind and has moved out of the bottom of the cycle," said Tim Lawless, national research director with PRDnationwide Research.
Looking forward, Lawless expects the resource-rich markets to maintain the highest growth in the country. "This applies not only to Western Australia and Northern Territory, but also the resource intensive areas of Queensland such as Mackay, Townsville and Gladstone," he said.
Lawless also believes the rising house prices will cause further drop in affordability levels particularly after the recent rate increases. "The falling levels of affordability are a positive sign for investors chasing rental yields, as more and more potential buyers are blocked from the market due to financial constraints, ultimately placing pressure on the rental market and pushing rental rates even higher," said Lawless.