The housing market has posted its longest stretch of quarterly gains since the 2010 boom, with Sydney home prices leading the surge.
For the September quarter, the average weighted price across capital cities rose 1.9 per cent, which was slightly below economist expectations of 2.1 per cent. Sydney brought the average up, rising 3.6 per cent; Melbourne pushed 1.9 per cent higher and Brisbane 1.2 per cent.
House prices surge, but economists don't expect a boom like in the early 2000s. Photo: Paul Rovere
"This is the first time since 2010 that the capital city average has shown four consecutive quarters of growth year on year," said Robin Ashburn from the ABS.
Advertisement "Sydney's rises were broad based in the September quarter, with most areas going up, but prices were mixed in Melbourne, with some areas showing rises and others falls.
In the year to October, average house prices across the country rose 7.6 per cent, according to the Australian Bureau of Statistics.
In the same period, prices in Australia’s largest property market, Sydney, jumped 11.4 per cent, while Melbourne gained 6.8 per cent and Brisbane 4.1 per cent.
JPMorgan economist Tom Kennedy said the data showed the housing market, particularly in Sydney, was on the rise.
‘‘In [Sydney] things really are starting to heat up,’’ he said. ‘‘In Melbourne as well, price appreciation was very strong and also in Brisbane.”
‘‘A big part of the Reserve Bank story is that they’ve been trying to revive the construction sector so I think the big uptick we’ve seen in prices definitely is supportive of that, as higher prices encourage activity and investment.’’
Macquarie Bank senior economist Brian Redican said the strong lift in Sydney’s housing market was due to an underperformance in comparison to other capitals over the past decade as well as the supply of houses available for purchase being low.
The number of finance commitments for first home buyers plunged nearly 22 per cent in the past year despite record low interest rate, according to the ABS.
First timers now comprise only 13.7 per cent of loans, which is their lowest market share since early 2004.
“First home buyers are all but absent from the recovery over the last 12 months. It has been investors and some of the second home buyers that have really driven up prices in that time,” said Mr Redican.
Mr Redican said he would be surprised if house prices took off the way they did in the early 2000s.
“You need to have first home buyers joining in the party, but also a return to the double digit credit growth that we had at that time, and I just don’t think that’s likely.”
Reproduced in full with permission: Fairfax Media - House price surge led by red-hot Sydney
4 November 2013
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