The worst of Australia’s housing market downturn appears to be well and truly over with property prices surging in the big cities.
House and apartment prices in Sydney and Melbourne have climbed for the third month in a row, new data from CoreLogic showed.
CoreLogic research director Tim Lawless said record-low interest rates, relaxed lending rules and the re-election of a Coalition government appeared to be working.
‘The significant lift in values over the month aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low,’ he said.
Sydney led the recovery, with median apartment prices surging by 1.8 per cent in August as equivalent house prices rose by 1.5 per cent, CoreLogic data showed (pictured is a Victorian-era cottage at Woollahra in the city’s eastern suburbs)
‘It’s likely that buyer demand and confidence is responding to the positive effect of of a stable federal government, as well as lower interest rates, tax cuts and subtle easing in credit policy.’
Sydney led the recovery, with median apartment prices surging by 1.8 per cent in August as equivalent house prices rose by 1.5 per cent, as it finished the month with a 78.9 per cent auction clearance rate.
Real estate values in Australia’s biggest city posted the biggest monthly increase since November 2016.
Melbourne was also in a strong position, with apartment values climbing by 1.5 per cent as house prices went up by 1.3 per cent – marking the steepest rise since April 2017.
‘While the recovery trend is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities,’ Mr Lawless said.
During winter, Australia’s capital city property prices rose by one per cent.
Australia’s biggest housing markets peaked in 2017 after the Australian Prudential Regulation Authority imposed stricter rules on investor and interest-only loans.
Melbourne was also in a strong position, with apartment values climbing by 1.5 per cent as house prices went up by 1.3 per cent (pictured is a mansion in the inner-east suburb of Toorak)
A tale of two big cities leading the recovery
SYDNEY: houses up 1.5 per cent to $877,220; apartments up 1.8 per cent to $699,126
MELBOURNE: houses up 1.3 per cent to $716,542; apartments up 1.5 per cent to $540,056
CANBERRA: houses up 1.1 per cent to $665,887; apartments down 0.3 per cent to $426,088
HOBART: houses up 0.8 per cent to $498,734; apartments down 0.9 per cent to $375,831
BRISBANE: houses flat at $533,101; apartments up 1.1% to $375,423
ADELAIDE: houses down 0.3 per cent to $462,945; units up 0.4 per cent to $322,142
PERTH: houses down 0.6 per cent to $454,774; units down 0.1 per cent to $345,311
DARWIN: houses down 1.6 per cent to $470,099; apartments down 0.5 per cent to $289,687
Source: CoreLogic Home Value Index for August 2019
While there was a winter recovery, Sydney’s median house price of $877,220 is still 16.4 per cent weaker than the July 2017 peak and is 7.7 per cent below where it was in August 2018.
Sydney is no longer dominating the top 10 list of Australia’s worst performing metropolitan housing markets.
Nonetheless, the city’s inner-south west was the nation’s worst urban market, with prices falling by 11.3 per cent during the past year.
Ryde, in Sydney’s north, has seen median real estate values fall by 10.2 per cent annually.
Melbourne’s median house price of $716,542 is still 13.9 per cent below the November 2017 peak, and 8.7 per cent weaker over the year.
The Mornington Peninsula area has suffered a 9.9 per cent annual slump while prices in Melbourne’s outer east have fallen by 9.3 per cent during the past year.
Hobart is the only capital city market where real estate values are at an all-time high, with median house prices climbing 0.8 per cent in August to $498,734 – following a 4.1 per cent annual increase.
The Tasmanian capital’s recent run of good luck was mixed, however, with apartment values last month falling by 0.9 per cent to $375,831.
Canberra also had a good end to winter with house prices rising 1.1 per cent to $665,887.
Its fortunes were mixed, like Hobart, with unit prices falling 0.3 per cent to $426,088.
Hobart is the only capital city market where real estate values are at an all-time high, with median house prices climbing 0.8 per cent in August to $498,734 – following a 4.1 per cent annual increase (pictured is a house at Battery Point on the River Derwent)
The other capitals suffered a decline in house prices with Brisbane flat, Adelaide falling by 0.3 per cent, Perth losing 0.6 per cent and Darwin slumping 1.6 per cent.
The banking regulator has recently scrapped a rule requiring lenders to model a borrower’s ability to repayment a 7.25 per cent standard variable mortgage rate.
This occurred after voters in May rejected the Labor Opposition’s plan to scrap negative gearing tax breaks for existing properties from next year.
In June and July, the Reserve Bank of Australia cut interest rates to a record-low of one per cent, taking standard variable mortgage rates below three per cent.