Sydney, Melbourne drive home price rises - The Australian

AUSTRALIA’s home prices continued their upward momentum in July, up 1.6 per cent across the country, according to the latest RP Data-Rismark index.

But the overall figure is hiding the emergence of an even greater disparity between prices in Sydney and Melbourne and prices in other state capitals.

Sydney house prices rose 1.5 per cent for the month, ending the three months to the end of July up 2 per cent, while Melbourne surged 3.7 per cent in July, ending 1.8 per cent higher for the quarter. Median prices now sit at $650,000 and $540,000 respectively.

But the strong capital gains weren’t replicated in other capitals, with Brisbane and Adelaide down 0.1 per cent, Perth falling 0.5 per cent and Hobart down 0.6 per cent. Only Darwin and Canberra recorded rising prices for the month, up 2.8 per cent and 1.5 per cent respectively.

But the strong monthly growth in Darwin didn’t stop the city from recording only a minor price increase over the last three months, with prices rising just 0.8 per cent to $515,000.

Over the last 12 months, Sydney has recorded at least twice the growth of any other capital except for Melbourne. Sydney has recorded price rises of 14.8 per cent across the 12-month period, while Melbourne managed 11 per cent. The next highest increase was Brisbane, where prices grew 6.9 per cent.

Earlier this week investment bank HSBC singled out Sydney as most at risk of developing a housing bubble, with its chief economist Paul Bloxham writing “that merely the expectation of rising housing prices may be starting to drive housing price gains”.

Tim Lawless, RP Data’s chief economist, said price would continue to increase, although growth rates would continue to taper back to more sustainable levels.

“What is likely though is that the rate of capital gain will continue to reduce, particularly in those cities where affordability constraints are the most significant and rental yields are the lowest,” he said.

“The most affordable suburbs across the capital cities are generally showing the lowest capital gain over the past year suggesting buyer demand many be held back by price barriers.”