SYDNEY Aug 1 Australian home prices rose in
July for a second consecutive month led by strong gains in
Melbourne, putting paid to recent talk the market was running
out of steam and due for a large correction.
Figures from property consultant RPData-Rismark showed
dwelling prices in Australia's major cities rose 1.6 percent in
July, from June when they climbed 1.4 percent.
Prices were 10.2 percent higher than in July last year,
picking up slightly from June's pace of 10.1 percent.
Melbourne boasted the biggest gains in July, with a 3.7
percent rise, while home prices in Sydney rose 1.5 percent. On
the year, Sydney was 14.8 percent higher, followed by an 11.0
percent increase for Melbourne.
Rising home prices have been welcomed by policymakers as
necessary to encourage a much-needed revival in home building,
which is indeed underway.
RP Data research director Tim Lawless said the housing
market should record further capital gains with interest rates
remaining low and fixed rates falling further.
Australia's major banks recently cut three- and five-year
fixed-rate mortgages to record lows below 5.0 percent, even with
the Reserve Bank of Australia (RBA) expected to hold its cash
rate steady at 2.5 percent for some time yet.
However, Lawless said home price growth was tapering in
trend terms back to a more sustainable level.
Over the past six months, capital city dwelling values grew
3.7 percent, down from the peak growth rate of 7.2 percent seen
over the six months ending November.
Over a similar time frame, growth in mortgages has also
started to ease, suggesting buyer demand may be dampened by
affordability issues and low rental yields in the largest
"The real litmus test for the market will be how much buyer
demand is apparent during the Spring selling season," Lawless
"Winter has seen above-average auction clearance rates.
However, as listings inevitably rise sharply over the coming
months this will create the greatest test for the Sydney and
Melbourne housing markets in terms of how strong value growth
(Reporting by Ian Chua; Editing by Shri Navaratnam)