Sydney and Melbourne remained the best performers in September due to the increased participation of property investors, according to the latest report by CoreLogic.
The two cities both reported price gains of 1.7% on a month-on-month basis. For the three months to September, Sydney and Melbourne also reported the most substantial value growth at 3.5% and 3.4%, respectively.
The two housing markets lifted the overall growth in dwelling values by 0.9% monthly and 1.7% quarterly.
Also read: Market Witnesses "Abnormal" Decline In Listings
The growth in these two cities can be attributed to the strong activity by property investors. Figures from the Australian Bureau of Statistics show that investors accounted for 32% of the mortgages issued in New South Wales and 26% of home loans in Victoria.
"Although markets outside of Sydney and Melbourne aren't showing the same recovery trend, most areas have either seen a reduction in the rate of decline or are seeing a modest trajectory of growth as low mortgage rates and a slight loosening in credit policy support buyer demand," CoreLogic head of research Tim Lawless said.
Furthermore, he said the economic and demographic conditions in New South Wales and Victoria continue to outperform most areas of the country, helping Sydney and Melbourne achieve substantial house-price growth.
"Population growth is higher, unemployment is lower, and jobs growth is stronger, providing a solid platform for housing demand," he said.
Also read: Sydney’s Auction Grows As Melbourne Slumps
Sydney and Melbourne helped the overall housing market achieve its third consecutive month of gains. However, while housing values are consistently rising month after month, they are still below peak levels.
"This indicates that buyers still have some time to take advantage of improved housing affordability before values return to record highs," Lawless said.
The table below shows the performance of each capital city:
Housing boom trigger?
Market watchers expect the consistent price gains to trigger a boom.
"The turnaround in the housing sector has been sharper than we forecast. Auction clearance rates, prices and finance have all beaten our expectations," ANZ chief economist David Plank said.
The low interest-rate environment could further boost the price gains in high-demand areas such as Sydney and Melbourne. Westpac economists are expecting house prices in the two cities to rise by 12% by 2020 while UBS market watchers are predicting a "mini-boom", with prices increasing 5% to 10% in the next 12 months.
Reserve Bank of Australia Governor Phillip Lowe said a sharp recovery in house prices would only trigger an alarm if credit growth balloons rapidly, which, he believes, is unlikely at the moment.
"It is nevertheless likely that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieving more assured progress towards the inflation target," he said.
Top Suburbs :
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