Housing prices surge in Melbourne and Sydney
Solid home price gains in Sydney and Melbourne last month are driving national average home values higher. But analysts caution August’s sharp rise isn’t necessarily the start of a brand new boom.
Property costs had risen modestly for the prior two months of winter in Sydney and Melbourne, but CoreLogic’s head of research Tim Lawless said the August outcome was at another level.
But, Mr Lawless stated that the rate of growth over coming months would rely on policy responses from the Reserve Bank and bank regulator APRA should they become concerned that household debt starts rising again from record levels. It also warned that all capital lending companies need to be aware of the changes when advising their clients.
Mr Lawless said the two biggest cities are vulnerable to some renewed mortgage lending crackdown, provided that the ratio of house prices to household income are still around 8.5 in Sydney and 7.5 in Melbourne.
While potential first home buyers in both large cities will be lamenting the return to cost development, Mr Lawless said at least they aren’t being confronted with substantial rent increases. In Sydney, rents are falling, rather than climbing by more than 3 per cent elsewhere.