Two-tier australian market continues to grow

Sydney Harbour Photo: Wikimedia Commons

The two-tier nature of Australia's property market continues to grow, as Sydney and Melbourne see prices rise significantly faster than the rest of the country.

The two capital cities set a rapid pace for capital gains in July 2015, according to the latest CoreLogic RP Data Home Value Index, with prices up 2.8 per cent month-on-month and 11.1 per cent year-on-year.

The growth, together with new stock additions to the market, was enough to push the aggregated national value of all dwellings past the $6 trillion mark.

According to Tim Lawless, CoreLogic RP Data’s head of research, the total aggregated value of Australian housing has increased by just over half a trillion dollars over the past 12 months.

"Based on APRA data through to March, approximately $1.3 trillion of bank debt remains outstanding against the asset class. Taking into account housing debt from the non-bank sector as well suggests that the overall debt to valuation ratio across the national housing portfolio is likely to be around the mid 20 per cent mark," he comments.

Former runner-up Melbourne overtook Sydney in the past three months to record the highest price rise: dwelling values in the city surged 6.1 per cent across the three months ending 31st July, the highest rolling quarterly rate of growth since the three months ending August 2014.

"To date, the capital cities have seen remarkable differences over the growth cycle which broadly commenced at the end of May 2012 and since that time dwelling values across our combined capitals index have increased by 30.4 per cent. Sydney values are 47.9 per cent higher over the current cycle and Melbourne values are 32.1 per cent higher while every other capital city has seen growth of less than 13 per cent over the same period. This highlights the extent to which the Sydney and Melbourne markets have outperformed other markets over the past three years."