Sydney home prices were higher again last month but the other capital cities stayed fairly flat. Figures from CoreLogic RP Data reveal that Sydney’s growth from February was 3 per cent which helped the nationwide price rise achieve 1.4 per cent. Canberra was the second highest for price growth with 1.9 per cent followed by; Darwin, 0.9 per cent; Melbourne, 0.6 per cent; Hobart, 0.2 per cent; and Adelaide, 0.1 per cent. There was no gain in prices in Perth while Brisbane saw a 0.3 per cent drop. Over the year Sydney is the only capital to show gains in double figures, at 12.9 per cent, with Melbourne in second place with 5.6 per cent.
CoreLogic RP Data head of research Tim Lawless says it will create a dilemma for the RBA next week as the cut in interest rates has fuelled price growth in Sydney and another one would likely do the same. He says there is potential for investors to be left with an expensive but low-yielding asset at the point when Sydney’s housing market loses momentum: "Although household income growth is minimal, Sydney’s housing market continues to reach new record highs, with values increasing over the past 35 months. It does pose the question of how much longer the growth can persist.”
Source: CoreLogic RP Data
Building approvals stay at near-record levels
The number of housing approvals has increased in trend terms for the past 9 months with February showing a 1.6 per cent rise. New data from the Australian Bureau of Statistics reveal that dwelling approvals increased in all territories although growth for private dwelling approvals was flat. Private dwelling approvals did increase in New South Wales (1.8 per cent) and Victoria (0.7 per cent) but fell in South Australia (1.5 per cent), Western Australia (1.4 per cent) and Queensland (0.9 per cent).
The Housing Industry Association’s Shane Garrett concluded that the results were positive though: “At a time of weak overall domestic demand, new residential construction is acting as a welcome pillar of support. A steady pipeline of new homes represents the most effective solution to alleviating housing affordability pressures.” The figures show that multi-unit approvals declined while there was an increase in approvals for detached houses.
Sources: ABS, HIA
Fixed rate mortgages losing favour with homebuyers
Fixed rate home loans are increasingly less popular with Australian homebuyers according to Mortgage Choice. The level of fixed-rate mortgages hit a two-year low in March at just 18 per cent of all home loans. Mortgage Choice spokesperson Jessica Darnbrough said over the last 12 months, fixed rate demand has dropped from all-time highs to near record lows: “Since December 2013, fixed rate demand has dropped approximately 15 per cent, falling from the historical high of 33.06 per cent.” She said that with interest rates low, and predicted to be cut again in the coming months, variable rates are more attractive to buyers.
Source: Mortgage Choice
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