HOUSE prices have defied predictions of a gradual slow down, posting the biggest jump over the three months of winter since 2007 as low interest rates continue to fuel the market.
Figures from RP Data, released ahead of today’s Reserve Bank of Australia monthly meeting on the cash rate, found prices across the capital cities increased 4.2 per cent to a median of $520,000 for the quarter to August 31.
Interactive: Growth in property prices
Sydney’s median price surged 5 per cent to $650,000 and Melbourne’s prices jumped up 6.4 per cent to $523,750, a growth rate far ahead of the other capital cities.
Canberra homes were up 2.4 per cent, Adelaide prices increased 1.5 per cent, Brisbane was up 1.3 per cent and Perth was up by 1 per cent.
Hobart was down 0.8 per cent while Darwin dropped 0.6 per cent.
Cameron Kusher, a senior researcher at RP Data, said while spring generally saw higher price growth than winter, he wouldn’t be surprised if this had reversed. “We saw a strong winter because of a lack of supply at the same time as low interest rates. Buyers could have a lot more supply to choose from in spring,” he said.
Worried about continued price growth, Megan Harold and husband Chris decided to sell their house in Sydenham, in Sydney’s inner west last weekend, moving to a larger house they purchased at the same time. “The way the market was going, we knew if we didn’t make the move now we wouldn’t get the kind of property we wanted,” Megan said.
The Harolds purchased in Earlwood, where larger block sizes mean it will be easier to reconfigure the house as their family grows.
Sydney realtor Maria Hodgson-Smith, from Day & Hodgson, said there weren’t enough houses to satisfy demand, with many selling before auction date as buyers became more aggressive.
Brian White, chairman of real estate agency Ray White, said the housing market was mimicking the economy with the resources-driven cities of Perth, Brisbane and Adelaide performing well, but completely outshone by the financial services-oriented cities of Sydney and Melbourne. Offshore investment had also underpinned those markets, he said.
Mr Kusher said price growth was encouraging many to invest in property, although he said once interest rates began to rise this should pull back as investors moved on to other markets. “Sydney prices have increased by 50 per cent since 2009, and Melbourne by 45 per cent, so a lot of people have built up a lot of equity in their home to invest, and there’s not been a lot of returns to be had with money parked at the bank,” he said.
Scott Haslem, chief economist at investment bank UBS, interest rates would begin to “normalise” around May next year, increasing again in June.
Story: Kylar Loussikian and Turi Condon Source: www.theaustralian.com.au