The Sydney and Melbourne property markets are seeing substantial growth, but where does this leave the rest of the country?

Australia’s housing boom is often characterised by the sizeable growth in these two markets. The reality, however, is much more diverse.

Housing Industry Association senior economist Shane Garret said there tends to be a bit of a “blind spot” when it comes to the other cities.

“There seems to be a characterisation of Australian dwelling prices at the moment growing very strongly when in fact they’re growing strongly in only two of the eight capital city markets at the moment,” he said.

Outside of Sydney and Melbourne, prices have fallen in three of the capital cities with increases of less than 10% cumulatively of the remaining three over the current recovery phase.

The national median dwelling price was determined to be 5.43 times average earnings in February 2015.

Individually, Sydney was the highest (7.72) followed by Melbourne (6.60) and Perth (5.77). At the other end of the scale were Hobart (4.49), Adelaide (5.36) and Brisbane (5.45).

Garret said the national market as a whole was generally in a balanced position. 

“The prices are pretty much in line with fundamentals,” he said.

“The average earnings to price ratio around the country is pretty much in line with what it has been over the last decade. If you also take into account rental income relative to the size of the dwelling and also mortgage interest rates, all of those three indicators are aligned with one another.”

However, it was also fair to characterise the market as being one where growth is quite “divergent”.

“There are two cities that are growing quite solidly in terms of price and the remaining six are in various degrees of status with their respective price growth. They’re growing either very slowly or not at all,” he said.