Investors swooped into the Melbourne property market, pushing property prices to nearly double digit growth in the September quarter, according to the latest Residex report.
House prices surged by 9.12% to $439,000 whilst units jumped by 8.57% as buyers snapped up properties in Melbourne's inner and middle ring suburbs. The affluent suburb of Kew notched the highest number of house sales for the three months ending September. Huge demand pushed median house prices by 10% to $1.12m. Over the last 12 months, capital growth climbed by about 19%.
Apartments in South Yarra and St Kilda were the most wanted, with each suburb racking up around 9% capital growth in the same period. Investors saw rental rates go up by more than 4% amidst shrinking rental supply.
Growth in Brisbane appeared to have moderated, with house prices rising by just 4.71% to $411,500 in the same period. Capital growth for units was also lower at 1.90%. On the bright side, rental returns for units averaged a healthy 5.10%, whilst houses achieved 3.92%.
Properties in Sydney continued to trudge along slowly with house prices growing by a meagre 0.49% to $572,000 and the unit market by 1.01% to $390,000.
Rents across the country continued to spiral upwards in every capital city, recording a $50 a week increase over the last 12 months, except for Hobart. Rental properties in Perth achieved the largest increase with a 36% jump year-on-year or an equivalent of $85 a week increase.
Whilst the strong overall performance of Australia's property market is welcome news for investors already in the market, the current property boom may contribute to higher inflation numbers that could result in another rate rise, according to John Lindeman of Residex.
"Rises in both house purchase prices and rents impact directly on the housing component of the Consumer Price Index (CPI), and the Reserve Bank of Australia will be closely watching the CPI figures due to be released on 24 October. Another rate rise would be bad for Sydneysiders, where house values in outer-southwestern areas continue to slump while big increases are recorded in the upper socio-economic suburbs," he noted.
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