Home prices in Australia’s big east coast cities show no sign of slowing, with the latest CoreLogic figures pointing to an average 0.5 per cent gain across the nation last month.
That takes the quarterly rise to 2.7 per cent, while prices were 7.5 per cent higher over the past year.
CoreLogic’s research director Tim Lawless said capital city housing values are just over 9 per cent higher over the first 10 months of this year highlighting the recent re-acceleration.
It is a re-acceleration being driven by Australia’s two biggest property markets — Sydney and Melbourne — with Canberra also coming along for the ride.
“Consistently over the past two months we’ve been seeing Sydney clearance rates above 80 per cent, in fact there’s only been one week over the past eight where the clearance rate has dipped only slightly below the 80 per cent mark,” he said.
“So I think we have seen some rebuilding in the housing market on the back of a lower cash rate and lower mortgage rates.”
Across most of the capitals, detached houses are outperforming units for price growth amid fears of an apartment glut in many cities.
The gap is less pronounced in Sydney, where apartment oversupply fears are more muted.
Lack of properties for sale driving prices through the roof
While there are concerns about an oversupply of new units, the key factor driving up house prices appears to be an undersupply of homes listed for sale.
In Sydney, there has been a 16.5 per cent drop in the number of new listings hitting the market compared with this time a year ago, while Melbourne is down 4.6 per cent.
Even though sellers can achieve record sales prices in those two cities, they also have to pay a record price to buy somewhere else in the same market.
Mr Lawless said they also face significantly higher transaction costs.
“Most transactional costs are percentage-based so, in a market like Sydney where we’ve dwelling values rise by about 95 per cent since the beginning of 2009, it means that the cost of selling and buying a home has become significantly more expensive,” he observed.
“Stamp duty costs, [real estate] agency fees, relocation costs and so forth are one of the big barriers.”
However, Mr Lawless said the current home price spike is still a significant moderation from the peak growth rate of nearly 19 per cent per annum for Sydney property prices in July last year.
That will probably continue to give the Reserve Bank a bit of comfort that tighter lending regulation is taking a little heat out of property markets stoked by two interest rate cuts so far this year.
The Reserve Bank announces its latest rate decision at 2.30pm (AEDT) Tuesday, but only a handful of analysts are expecting it to cut again this year.