Property prices grew 2 per cent over the June quarter across Australia’s capital cities, official data released on Tuesday shows, and more growth could be on the cards.
Sydney and Melbourne property prices increased 2.8 per cent and 2.7 per cent respectively over the three months to June, followed by Canberra up 2.2 per cent, Australian Bureau of Statistics price results found.
Brisbane grew 1.1 per cent over the same period, while Perth property prices fell 1.2 per cent.
This is Sydney’s strongest performance after two consecutive quarters of price falls in December and March, which seemed to signal an end to the property boom.
It also comes exactly a year after Sydney’s fastest growing quarter, where property prices jumped 8.9 per cent in the three months to June 2015.
But the strong result wasn’t a surprise for NAB chief economist Alan Oster who expected the data to show a 3 per cent increase over the quarter.
And the market is now “accelerating quite a bit in Sydney and Melbourne… there’s still more to come,” Mr Oster said.
In the September quarter, he anticipates property prices will be up a further 4 per cent in Sydney and 3.5 per cent in Melbourne. In Perth, prices are expected to drop 3.5 per cent.
Domain Group chief economist Andrew Wilson also expected the data to show Sydney prices growing again over the three months to June.
“It’s a rebound in growth after falling in the March quarter,” Dr Wilson said. The Domain June House Price Report saw Sydney’s median house price push up past $1 million again, up 2.4 per cent.
And with auction clearance rates back to near-record highs over September, experts have warned property prices will continue to rise and regulators may need to step in again to cool the growth.
Over the year to June 2016, Melbourne outstripped all other capital cities with an 8.2 per cent increase in property prices – double the 4.1 per cent national growth rate.
Sydney’s annual growth rate was 3.6 per cent, but this would likely be much higher by the end of the calendar year, SQM Research managing director Louis Christopher said.
“If we were to annualise [the latest quarterly growth] it would be just over 10 per cent,” Mr Christopher said. The latest quarterly growth is likely to continue for Sydney for the rest of 2016.
This strength would likely be on the back of restrained stock levels, particularly around the inner suburbs.
“Normally there would be a seasonal rise in mid-September listings, but there’s not a lot [on the market] coming through for spring,” he said.
“Many buyers who sold in July and August are unable to re-enter the market … increasingly more crazy money is being spent,” he said.
Some major cities would potentially be hindered by claims of an upcoming oversupply, though latest SQM Research data found rents increasing and vacancy rates declining in most capitals.
Brisbane, where property price growth was relatively subdued for the quarter, was still facing vacancy rates at about 4.7 per cent in the CBD. In Melbourne’s CBD, vacancy rates were recorded at 3.1 per cent. Sydney CBD was the tightest overall, at 2.1 per cent.