Sydney’s property has surged again after its recent slump, reflecting a national property price growth driven by the RBA’s rate cut in May.
Sydney’s price growth was strongest in the nation for May, jumping 3.1 per cent, and 6.6 per cent over autumn.
Melbourne still beats Sydney over the whole year, pipping them 13.9 per cent to 13.1 per cent respectively.
Melbourne recorded property price growth of just 2.1 per cent for the quarter, well below Sydney’s resurgence.
With solid gains from the likes of Brisbane, Hobart, Canberra and Adelaide, growth in Australian capital cities combined has returned to double figures, hitting 10 per cent over the past year.
The figures come from CoreLogic and head of research Cameron Kusher told the ABC the rebound in growth is being driven by low interest rates.
“That interest rate cut is the big driver of the market at the moment,” he said.
“Investors have come back a little bit, more recently we’ve seen some of the banks loosen their lending policies to investors, we know that investor credit growth is now well below 10 per cent per annum, so they’ve got a little bit more scope to ramp up lending to investors.”
“I think they (APRA) would be concerned, and I think they’ll be watching this very closely and maybe considering some tightening of the lending policies.”
The growth in house prices isn’t being matched by rising rents, which have stagnated by growing just 0.7 per cent this year.
Mr Kusher told ABC this should serve as a warning to investors.
“People are buying at, or very close to, the top of the market, and they’re stretching themselves to get into the market now,” he said.
“They might actually find that in a year or two values have fallen and they’re actually under water, and eventually interest rates might increase and they may have difficulties repaying those mortgages.”
Mr Kusher’s warning is already being lived out by investors in Perth, who have seen prices fall 4.2 per cent over the last year.