The property market enjoyed a bumper season in 2013. There was a significant rise in house price in larger cities of Australia. The Sydney market was bolstered to new heights by investors while clearance rates in Sydney and Melbourne returned to 3-year highs.
The median prices of houses in Sydney went up by 15.1% and in Melbourne it was up by 8.6%, according to figures from Australian Property Monitors. As house prices become only steeper and analysts saying first home buyers locked out by skyrocketing values, what are the trends in 2014? Read our investment property update to know where the property market in Australia currently stands.
House price growth in Sydney and Melbourne
According to Figures released by RP Data on 29th September 2014, City housing markets reported their best ever winter since the global financial crisis. RP Data’s Home Value Index reports that capital city dwelling prices rose by 4.2% over three months ending August compared to the same period on 2007.
Once again, the surge in house prices were driven by Melbourne and Sydney markets, which registered increases of 6.4% and 5% respectively, according to RP Data.
Tim Lawless, research director of RP Data, says that the surging property values in the two biggest Australian cities have become the feature of property landscape in the last 5 years.
He says that Sydney dwelling values have increased by 27.2% and Melbourne registering a rise of 19.5% in the latest growth cycle.
Melbourne and Sydney were also the best performing cities during 2009-2010 growth cycles, according to Mr. Lawless.
What are the Suburbs to watch?
In 2013 and before, Sydney’s prestige market had been lagging behind but it begin rising in 2014.
Sydney’s eastern suburbs and northern shore have particularly done well. These areas saw modest growth levels in 2013 but there is much room for growth. If the sharemarket shows strong growth, the prestige market is expected to keep bubbling along.
In Melbourne, the eastern suburbs, which are the expensive areas, also recorded the best performance in 2013.
Although the eastern suburbs have been the best performers of 2013, questions still linger as to whether they have reached affordability levels.
Although are still some upsides like the premium markets of Sydney, it is expected that there will generally be price growth moderation. Reducing numbers of first time homebuyers will also impact on the outer eastern suburbs.
Every capital city has its inner ring areas which offer strong investment opportunities. Sydney has Bellevue Hill, Melbourne has Malvern, Perth has City Beach and Bulimba in Brisbane.
Melbourne has the most number of top 5 hottest suburbs with Elwood, Richmond, Rhodes and St. Kilda all featuring. At the same time, units in North Bondi (Sydney), Subiaco (Perth) and West End (Brisbane) have been predicted to deliver good inner ring growth performances in their respective cities.
Melbourne, particularly, is defying past forecasts. It appears as if it has been oversupplied with property, especially units. However, demand is presently being driven by three main factors. These are international buyers supporting new unit sale, developers managing their properties well and higher public confidence which is in turn being driven by things like good clearance rates at auctions.
If you want to buy property in the coming 12 months, it is important that you be aware of growth patterns. It is very important to carry out proper research on the market and back up your decision with insight and data.
Will house prices to continue to rise?
The June quarter report shows that strong market conditions continue to prevail in many capitals. Price houses in Australia continued their meteoric rise in the June quarter report with many capitals reporting similar or higher growth levels compared to the March Quarter results.
The national median prices of houses increased by 1.9% compared to the rise of 1.7% that was observed in the March quarter. There was also a sturdy rise in the median unit price which grew by 2.7% compared to the 2.0% growth of the March quarter.
Sydney is the standout performer
Sydney housing market still remains the standout performer after posting another god result in the June quarter. It recorded an increase of 3% in its median house price to stand at $807,880 and in the process smash the previous$800,000 barrier. It increased by 14% or $114,000 in the 2014 financial year. Sydney recorded the best quarterly and annual results of all capitals.
The growth of house prices in Sydney over June quarter outstripped the March quarter performance of 2.6% although it remained below the 5.6% that was recorded in the December quarter in 2013. Also, Sydney unit prices recorded strong growth of 3.5% over the June quarter to 12.2 per cent.
Melbourne housing market also reported an impressive growth over June as median house prices rose by 1.8%. Again, this was higher than the previous March quarter results. In the period ending June, Melbourne house prices went up by 10.3% while unit prices increased by 2.7% to stand at 8.8% over the year.
What are the fundamentals of housing price markets?
Experts agree that housing market fundamentals are still very strong. Not only have house prices done well but activities have also picked up. It is only renovations to old homes that remain weak. This is attributed to strong population growth which is in turn driven by immigration and low mortgage rates. These factors are likely to continue pushing up the expanding market.
Economists had projected that new building approvals would ease by 0.3% in December following a fall of 1.5 percent in November and 1.8% drop in October. These falls partially reversed the acute September jump.
Many people had thought that the Australian property bubble would burst but if these figures are anything to go buy, then the market is still pretty very strong. The house prices in major Australian capitals like Sydney, Melbourne, Brisbane and Perth continue to rise encouragingly. Low mortgage lending rates have also driven the market. However, the single biggest losers are the first time buyers who are literally being priced out of homes. Experts however see the Australian property market holding its own for some time to come. The property market in Australia has been in buoyant mood in the last 5 years recording its best performance in decade. As expected, Sydney and Melbourne remain the biggest drivers of Australian property growth.