CoreLogic’s Tim Lawless says that house prices in Sydney and Melbourne have clearly bottomed. (ABC News: Alistair Kroie)
Very strong home price gains in Sydney and Melbourne last month are driving national average dwelling values higher, but analysts caution August’s sharp bump is not necessarily the beginning of a fresh boom.
CoreLogic’s monthly home value index showed a 0.8 per cent rise in dwelling values nationally, while Sydney’s gain was twice that size.
Melbourne’s 1.4 per cent monthly increase also powered the overall result, while Australia’s two biggest housing markets also had the biggest quarterly increases, just below 2 per cent.
No other capitals came close, with Canberra (+0.8 per cent), Hobart (+0.5 per cent) and Brisbane (+0.2 per cent) the other cities posting gains, while Darwin (-1.2 per cent), Perth ((-0.5 per cent) and Adelaide (-0.2 per cent) continued their declines.
Regional markets outside the capitals also lagged, with prices falling an average of 0.1 per cent.
Property prices had risen modestly for the previous two months of winter in Sydney and Melbourne, but CoreLogic’s Tim Lawless said the August result was at another level.
“The August figures really have taken quite a step change upwards, which is much is a much stronger rate of growth than what we would have expected,” he told ABC News.
“It does look like a growth trajectory is very much on the cards.”
However, Mr Lawless said that the rate of price growth over coming months would depend on any policy responses from the Reserve Bank and bank regulator APRA if they become concerned that household debt begins increasing again from record levels.
Mr Lawless said the two biggest cities would be most vulnerable to any renewed mortgage lending crackdown, given that the ratio of house prices to household income are still around 8.5 in Sydney and 7.5 in Melbourne.
“Affordability constraints will probably continue to worsen from here if we do see housing prices continuing to rise, particularly against a backdrop of very soft wages growth,” he said.
“Particularly if we do start to see lenders becoming more focused on factors such as minimising exposure to high debt-to-income ratios, you’d have to expect that would impact on the very expensive markets, like Sydney and Melbourne, more so than the more affordable markets.”