Finance Finance News Home prices surging higher at an ‘unsustainable’ rate

Home prices surging higher at an ‘unsustainable’ rate

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Home prices have bounced back following a flat February, but the current rate of growth is unsustainable, an analyst says.

Capital city home values jumped 2.3 per cent in March after a flat result the previous month, according to the RP Data Rismark Home Value Index. 

Over the first quarter of 2014, capital city home values were up 3.5 per cent, and up 10.6 per cent over the year.

Sydney led the charge with values growing 15.6 per cent in the last 12 months.

Half of all capital cities – Sydney, Melbourne, Perth and Canberra – were now posting record high prices, RP Data research director Tim Lawless said.

Since last June, dwelling values were up by almost 13 per cent, which was an unsustainable rate of growth, he said.

“Over the long term, I don’t believe such a strong pace of growth can be sustained,” Mr Lawless said.

“We expect housing market conditions to cool down as the year progresses.

“If the pace of capital gains doesn’t slow, we may see higher interest rates realised much earlier than previously expected.”

Rismark managing director Ben Skilbeck said March typically was a strong month for home values.