You are here
Australian city home prices jump anew in June: RPData
[SYDNEY] Home prices across Australia's capital cities jumped in June as demand re-accelerated in Sydney and Melbourne after a brief pause in May, a sign of froth that will add to policymakers' concerns about a potential bubble.
Figures from property consultant CoreLogic RP Data showed dwelling prices across all of Australia's major cities surged 2.1 per cent in June, after dipping 0.9 per cent in May.
Annual growth in home values picked up to 9.8 per cent, from 9 per cent in May, with Sydney far in front with a gain of 16.2 per cent.
For June alone, Sydney prices rose 2.8 per cent, while Melbourne added 2.9 per cent and Brisbane 1.7 per cent. Markets were much cooler elsewhere, with Perth slipping 0.4 per cent in the month and Darwin off 3.9 per cent.
The surge will not please the Reserve Bank of Australia (RBA), which has been concerned that speculative borrowing for housing investment could ultimately lead to a slump in prices, with adverse implications for the broader economy.
While the central bank cut interest rates to a record low of 2 per cent in May, it has sounded reluctant to go any further for fear of fuelling a house price boom. "With the RBA cutting the cash rate, there was an instant buyer reaction across the Sydney and Melbourne housing markets where auction clearance rates surged back to levels not seen since 2009," said RP Data head of research Tim Lawless.
He noted homes were selling in record time - Sydney in just 26 days and Melbourne 32 days.
The best of the gains were very much concentrated in Australia's two largest cities. Since values started rising in May 2012, Sydney prices have climbed 43.1 per cent and Melbourne 25.9 per cent. "It's no coincidence that New South Wales and Victoria are recording the strongest economic conditions coupled with the strongest rates of migration which is fuelling housing demand," said Mr Lawless.
Regulators have reacted by tightening their coverage of lending standards for property investment and there have been tentative signs banks are slowing growth in their mortgage books.