Sydney's 2013 price growth mild compared to past three boomsBy Jonathan Chancellor
Wednesday, 25 September 2013
So now Residex, one of the big property data analysts, puts Sydney's annual growth at 9.3%.
It's for the year to August, the most recent and also the highest annual figure yet.
But neither boom or bubble is the Residex interpretation.
There's no doubting parts of Sydney has its foot on the price pedal. Especially the professional buying class in the inner west.
And the inner west and greater Sydney are merely returning to their typical role of being the engine room of the country when it comes to price growth.
Residex's John Edwards says it seems likely that Sydney will again lead other capital city markets into a period of "moderate to strong growth."
Sydney's annual 9.3% capital growth takes the house median to $729,000.
Darwin is the next in terms of price growth, up 5% to a $572,000 median house price.
Perth slots into third place with 4% house price growth to a $506,000 median value.
Brisbane secured a 3.1% annual price growth to a $443,000 median house price.
Melbourne's $561,000 median followed subdued 1.3% price growth.
Adelaide's annual growth to August was 1.1% to its $392,000 house median.
Canberra, with the third highest capital city house median of $531,000, had mild 0.2% annual growth.
Hobart was the laggard with its 0.1% growth taking the median to $352,000, according to Residex.
Edwards noted it was worth remembering that for the year ending June 2010, Sydney house price growth was 17%; growth for the year ending July 2002 was 23% and growth in 1989 was 38%.
"Lower interest rates and, more importantly, improved consumer sentiment has caused a rebound in house prices," says Residex's John Edwards.
The Sydney market was "not a boom market and there is no “bubble” forming," he added.
The Residex prior boom comparison accords with the recent analysis by AMP Capital's Shane Oliver who looked as the percentage gain in key economic indicators 18 months after the first rate cut for the current and last three interest rate cutting cycles that started in July 1996, February 2001 and September 2008.
Oliver's RP Data/Rismark analysis found house prices up 13% in the 1996 period; 30% in the 2001-2002 period; and 11% in the post -gfc period of 2008. Oliver notes the current cycle has so far seen a 1.9% fillip.
Today the RBA noted the increase in property activity, particularly in NSW, was expected given this latest round of reductions in interest rates.
"Over the past year or so there has been an increase in property market activity.
"This is not surprising given the reductions in interest rates.
"The pick-up in demand, which has been sharper in New South Wales and from investors more generally, has been associated with recent increases in housing prices. It is important that those purchasing property do so with realistic expectations of future dwelling price growth," it noted in its bi-annual Financial Stability Review.
The RBA went on to say Australian households continue to show more prudence in managing their finances than a decade ago.
"The higher rate of saving and slower pace of credit growth have been in place for some time now, although surveys of households suggest that their risk appetite has increased a little, as would be expected in an environment of low interest rates and recovering asset prices.
"The risk profile of new household borrowing remains reasonably sound and indicators of household financial stress are low.
"The continued high rate of excess repayments on home loans is consistent with low rates of financial stress among households with mortgages," the RBA suggested.
Read more:
http://www.propertyobserver.com.au/news/sydney-s-2013-price-growth-mild-compared-to-past-three-booms/2013092465216