Sydney and Melbourne pull up national house prices

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AUSTRALIA’S two largest capital cities remain at the vanguard of the housing recovery, lifting the national house price through the September quarter.

REIA’s Real Estate Market Facts for the period said the weighted average median price for houses for the eight capital cities increased to $743,776.

“The increase was driven by the larger property markets of Sydney and Melbourne where house prices increased, while all other capital cities house prices decreased,” REIA president, Adrian Kelly said.

“The weighted average median price for other dwellings increased to $577,135 over the quarter, with prices increasing in Sydney, Melbourne, Adelaide and Hobart. Prices remained stable in Brisbane and Canberra and decreasing in Perth and Darwin.”

Australian Bureau of Statistics data released this week showed residential prices increased 2.4% for strongest quarterly period of growth since December 2016.

Sydney and Melbourne residential prices rose by 3.6% each, and by 1.3% in Hobart and 0.7% in Brisbane.

“The increase in property prices is in line with housing market indicators, particularly in Sydney and Melbourne. New lending commitments to households, auction clearance rates and sales transactions all improved during the September quarter,” ABS chief economist, Bruce Hockman said.

The total value of Australia’s 10.4 million residential dwellings rose by $189.9 billion during the September quarter to $6,869.4 billion.

CoreLogic data showed Sydney recorded its highest monthly house price growth in 31 years in November, of 2.7%, and along with Melbourne is likely to hit all-time-high values in the new year.

Lending to households for investment is at its lowest proportion of lending to households for dwellings since the series began in 2002. Currently it is at 25.6% for the September quarter, considerably lower than the average of 34.4% and the high of 43.0% in June of 2015.

According to the REIA, the median rent for three bedroom houses remained steady in most capital cities over the quarter, with only Canberra and Darwin decreasing, and rents for two bedroom other dwellings increased or remained steady in all capital cities, except Sydney.

The weighted average vacancy rate for the eight capital cities tightened slightly to 2.5% during the September quarter, which shows a slight tightening in the market compared to last quarter.

“Just as the past period of stability in rents can be attributed to the increase in investor activity around 2017, the more recent drop in investor activity will lead to increases in rents in the future with current decreases in the vacancy rate a pointer to this,” Kelly said.

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