- Posted By Prince Lakshman
Melbourne’s house prices are rising the fastest and there’s no signs of it slowing down, with a record of 2.3 per cent increase in housing values over the month of October – its biggest rate since 2009. This is followed by Sydney with an increase of 1.7 per cent.
CoreLogic’s Home Value Index reveals real estate values have picked up with 1.4 per cent rise overall in five capital cities of the country.
“The improved housing market conditions are becoming more geographically diverse,” CoreLogic’s head of research Tim Lawless said.
“Demand for housing is responding to stimulus measures, including mortgage rates that are now lower than anything we have seen since the 1950s and improved mortgage serviceability tests following APRA’s decision to adjust the minimum interest rate serviceability rules in July this year,” he added.
As always, Melbourne and Sydney are leading the growth trend; however, there’s also a subtle rise in property values across Adelaide, Brisbane and Canberra. Darwin is also tailing after with a monthly rise of 0.3 per cent.
Perth values fell over the month by 0.4 per cent as the city’s longest-running downturn continues. Hobart’s run of strong price growth is running out of steam with the Tasmanian capital recording a 0.9 per cent increase.
HSBC’s chief economist Paul Bloxham said that while he didn’t expect house prices to fall again any time soon in Sydney and Melbourne, he also didn’t expect house price growth to continue on the same rapid trajectory recorded in the five months since the end of the downturn.
“We are certainly seeing a very strong rise in Sydney and Melbourne house prices in the last few months and that is the result of a combination of factors,” he said.
“It’s partly to do with the fact that the RBA has cut the cash rate by 75 basis points and it’s partly to do with the fact that the prudential settings have also been loosened, so the combination is providing a lot of support for housing activity.
“I think the other part of this story, of course, is that that has happened really quickly. The rate cut and the prudential loosening has come to a market with very limited supply and that’s why we’re seeing such a rapid rise in house prices.