Looking back at the beginning of 2017, the markets in Sydney and Melbourne are still in a hot stage. People rush to enter the market; on the other hand, financial regulators APRA (Australia’s Prudential Regulatory Authority) and RBA (Australian Federal Reserve) have quietly started the process of trying to cool down the housing market in some cities.
Under the effect of the subsidy increasing for first home buyers, many challenges faced by overseas and local investors and banks’ tightening of the loan policies as well as other factors mixed ,in the first half of the year 2017, Australian real estate market is gradually adapting to the challenges raised by higher lending rates, more strict credit policies, and the changes of residents’ affordability of the property. In this quarter, the growth trend of the properties’ value is relatively modest compared with the beginning of the year.
According to the CoreLogic property value index in July 2017, the value of real estate in capital cities rose by 1.5% this month. The growth rate in most capital cities remain high. During this period, the property value in Melbourne rose by 3.1%, which is the main driving force of the national average monthly increase in July.
The market difference between Sydney and Melbourne is also evident in the auction clearance rate. During the seven weeks in the past two months, Sydney’s auction clearance rate has always been below 70%, while Melbourne’s auction clearance rate has been around 70%.
“Melbourne seems to have benefited from sustained and rapid population growth, which has created strong demand for housing and continued growing job opportunities as well as more economical housing options compared with those in Sydney,” Mr. Lawless said.
Data from CoreLogic show that over the past few years, Sydney and Melbourne’s housing prices have been ahead of other Australian cities. During the second quarter of 2017, among the capital cities, only Sydney’s, Melbourne’s, Brisbane’s and Perth’s house prices rose, while Perth was the only city whose second-quarter growth rate is higher than that of the first quarter.
At present, the median price of a single house in Australia is 670,000, while the median price of the apartment is 560,000. Despite the slowdown in house prices in Sydney and Melbourne over the past six months, median prices of a single house in Sydney and Melbourne have risen by 13% and 15%, respectively over the past 12 months and the median price of departments rose by 8.6% and 1.5% respectively.
In urban aspect, although house prices in Sydney have barely increased in the past three months, house prices have risen 12.2% in the past 12 months. At the same time, the growth rate of Melbourne’s house price has the best performance in all capital cities in Australia, which is 13.7%. The huge population increase (2.2% per year) and the largest number of new jobs (72,786 new jobs in the past year) are important driving forces of Melbourne’s housing prices.
(Melbourne has replaced Sydney in the past year to become city with the largest increase on house prices)
Although the level of interest rates in Australia is still in a low position, but the current real-estate cycle in all capital cites in Australia is very different.
Melbourne and Sydney in the past six months still have the most eye-catching performance in Australia. The investment and self-occupied needs make the house prices in these two cities continue to grow, but another problem goes with it is the higher and higher prices of the house. While in other cities, although there is no strong growth on house prices at present, but the prices are more affordable, which has made some long-term investors begin to pay attention there.