House prices jump in June quarter as Sydney and Melbourne post strong growth

In contrast to the RBA’s latest take on property trends, ABS figures indicate that house prices are heating up again.

Sydney’s property market ...

Australian house prices returned to strong growth in the June quarter after a lacklustre start to 2016, with valuations jumping 2 per cent across the country.

Figures from the Australian Bureau of Statistics reveal house prices advanced 4.1 per cent year-on-year, with quarter-on-quarter expansion swinging from -0.2 per cent in March to +2 per cent in June.

The results have pushed the total value of residential property in Australia’s capitals to a record high $6 trillion, with the average price striking $623,000.

The ABS report coincided with the release of minutes of the Reserve Bank’s latest policy meeting, in which it suggested the housing market had cooled.

“Conditions in established housing markets had generally eased over 2016,” the RBA said.

“Growth in housing prices had declined at the national level and across most capital cities over the past year, although there remained considerable variation by location.”

The ABS numbers hint the slowdown may have just been a blip, as they appear a return to the kind of quarterly expansion witnessed during the boom times across 2014 and 2015 after broadly flat results across the March and December quarters.

However, the central bank was able to point to other signs of a slowdown to justify the view of an easing from the heated growth of recent years.

“In the established housing market, the number of auctions had declined and remained lower than a year earlier, even though auction clearance rates had increased of late (particularly in Sydney),” the RBA said.

“In the private treaty market — where, nationally, over 80 per cent of transactions occur — turnover had also declined since the previous year and the average number of days that a property was on the market had been on an upward trend.

“Finally, in recent months, the value of housing loan approvals had been broadly steady and housing credit growth had been lower than a year earlier, consistent with the earlier tightening in lending standards and low turnover.”

The commentary suggests house prices are currently not a barrier to further rate cuts, although should the rate of growth seen in the June quarter continue, it will put a significant dampener on the chances of further reductions.

ABS numbers also showed established house prices outpaced the growth of attached dwellings, with 2.3 per cent expansion compared to 1.4 per cent growth.

Sydney and Melbourne, the nation’s two largest and arguably hottest property markets, led the way, with quarterly growth of 2.8 per cent and 2.7 per cent, respectively.

For the year to June 30, Sydney residential property prices are up 3.6 per cent, while Melbourne has seen a rapid 8.2 per cent escalation despite lingering fears of pressure on apartments given reports of an imminent glut.

Most of the nation’s capitals recorded growth through the June quarter, with Perth and Darwin the exceptions.

The declines leave Perth valuations 4.8 per cent below where they were at this time last year, while Darwin prices have slumped 6.5 per cent.

The total value of Australia’s 9.7 million residential dwellings shot up $138.3 billion to $6.0 trillion.