The first quarter of 2014 ended on a high for the Australian capital city property market according to figures from RP Data, with low interest rates ensuring investors and those wanting to upgrade their homes the big winners.
RP Data’s latest report shows capital city home values are now sitting at record highs, rocketing 15.6 per cent in Sydney and 11.6 per cent in Melbourne in the year to March.
While there was growth in all the other capital cities, it was more subdued. Values in Brisbane rose 4.8 per cent, Perth 4.7 per cent, Adelaide 4.6 per cent, Darwin 3.8%, Canberra 1.7 per cent and Hobart 0.9 per cent.
The premium end of the market is still performing best. Prices were up 7.2 per cent over the past six months compared to lower priced property values at 4.9 per cent during the same period.
The figures show it’s a seller’s market at the moment. The number of properties currently available is lower, vendor discounting has improved and homes are selling quickly in most markets.
The data confirmed rental rates are also beginning to ease, particularly in Sydney, Melbourne and, to a lesser degree, Perth. In the year to March, capital city rental rates rose 2.3% for houses and 3.2% for units – well below the five-year average of 3.9% for houses and 4.1% for units.
RP Data’s Senior Research Analyst, Cameron Kusher said that while investors and upgraders were driving the market, investors had probably missed their opportunity in Sydney and Melbourne and may start looking at opportunities in other capital cities such as Brisbane, Adelaide and Darwin.
He also warned that if home values continue to rise at the current pace, interest rates could start to go up again. Other factors that could pour water on the current housing market exuberance include rising unemployment rates or lack of job security, causing potential buyers to stay put.
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