Australian property prices continue climb

Photo credit: Kev Whelan

Property prices in Australia's combined capital cities continued to climb in February 2015, according to new figures from CoreLogic RP Data.

The firm's new statistics show that dwelling values have risen by a further 0.3 per cent in February, taking annual growth to 8.3 per cent.

Sydney is once again the clear standout with dwelling values 13.7 per cent higher year-on-year, while Melbourne values are 7.4 per cent higher. Australia’s third largest city, Brisbane, recorded the third highest rate of annual capital gain with dwelling values up 5.9 per cent.

In contrast, dwelling values have increased by less than four per cent in every other capital city over the year.

Since the beginning of the growth cycle in June 2012, dwelling values have moved 22.6 per cent higher across the combined capital cities. According to to head of research Tim Lawless, this again demonstrates the heat emanating from the Sydney market; values are up 34.8 per cent cumulatively over the cycle to date across Australia’s largest capital city.

Nonetheless, the latest month-on-month results show a moderation in the rate of growth compared with December and January. The monthly rate of growth slowed from 1.3 per cent in January and 0.9 per cent in December, although the trend remains strong in Sydney and Melbourne.

"The slower rate of capital gain in February may come as a surprise to some who were expecting lower mortgage rates to instantly propel the pace of home value growth higher," comments Lawless.

"We are already seeing the effect of lower mortgage rates, with auction clearance rates surging to the highest levels we have seen since 2009 and valuation activity across CoreLogic RP Data valuation platforms reaching new record highs based on daily averages over the second half of February. Despite the flurry of activity, it will likely take some time to see this flow through to a higher rate of capital gain."

"We might not see the lower interest rate environment stimulate the housing market as much as it has in the past. Weaker jobs growth, higher unemployment, declining affordability, low rental yields and political uncertainty are all factors that could dent consumer confidence and provide some counter balance to the rate cuts and quell any additional market exuberance."