Property prices growth in key Australian cities continues, latest index shows

Property prices in state capital cities in Australia increased further in February, recording an average rise of 1.4% and led by Sydney, the latest index shows.

It means that the current growth cycle is approaching five years in duration with rises in prices for 58 months, according to the figures from real estate firm CoreLogic.

Since capital city prices started to rise in June 2012 they have now increased by a cumulative 47.3%, ranging from a 74.9% capital gain in Sydney to just 6% in Perth.

Sydney, and to a lesser extent, Melbourne, have remained at the top of the capital gain tables over the past two cycles. Since the beginning of 2009, Sydney values have more than doubled, rising by 104.5% while Melbourne values are 87.7% higher.

The next best performing capital city over the same period was Canberra where dwelling values have risen by a comparatively modest 37.4%, the data also shows.

‘At a combined capital city level, growth conditions have been rebounding since the middle of last year when, on two separate occasions, interest rates were cut, and investor demand commenced trending higher,’ said CoreLogic head of research Tim Lawless.

‘Prior to capital gains accelerating half way through last year, the growth trend had been moderating, reaching a cyclical low point over the 12 months to the end of July 2016 when the annual change in capital city dwelling values slowed to 6.1%,’ he added.

He pointed out that February marks a new high point in the current growth cycle, with capital city dwelling values increasing by 11.7% over the past 12 months and the annual growth rate across the combined capitals hasn’t been this strong since the 12 months ending in June 2010.

In Sydney, where the annual rate of growth is now 18.4%, this is the highest annual growth rate since the 12 months ending in December 2002 when the housing boom of the early 2000’s started to slow.

Lawless pointed out that the rising values are good news for home owners but a growing challenge for prospective buyers. ‘The strong growth conditions across Sydney have provided a substantial wealth boost for home owners, however, the flipside is that housing costs are becoming increasingly out of reach,’ he said.

‘This is especially true for price sensitive segments of the market such as first time buyers and low income families. Affordability challenges are most pronounced across the Sydney housing market where, based on September 2016 data, dwelling prices are almost 8.5 times higher than gross household incomes. The second most expensive capital city, Melbourne, has a dwelling price to income ratio of 7.1,’ Lawless explained.

A breakdown of the figures show that in February prices increased by 3.2% in Canberra, by 2.7% in Sydney, by 1.5% in Melbourne and by 1% in Hobart. But month on month prices fell by 4.3% in Darwin, were down 2.4% in Perth and down by 0.4% in Brisbane.

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