This week we take a look at property price growth around Australia and ask Professor Steve Keen about the divergence of prices across the country. The comments come as Sydney’s median house price was shown to have crashed through the million dollar mark to $1,000,616.
The Domain Group House Price Report says a combination of low interest rates and strong investor buying has lifted Sydney house prices 8.4 per cent in the June quarter. Domain's Senior Economist Dr Andrew Wilson advises the gains represent the highest rate of growth since the boom times of the late 1980s.
Sydney house prices have now increased by 22.9 per cent in the past year alone. The Melbourne median house price is now $668,030 while the most affordable capital remains Hobart on $325,972. The median house price across Australia is $701,827.
FNN spoke to Professor Steve Keen from Kingston University London about the disparity in the gain in property prices in Sydney and Melbourne while mining cities such as Perth and Darwin continue to languish. We asked his thoughts on when a recovery might begin.
“I think the mining ones are going to fall off the edge of the cliff because there is no demand for them. The major thing keeping demand up in Sydney is baby boomers leveraging up and leveraged speculation on property process plus using super for the same thing. It’s a disastrous political policy to allow that to happen in the first place and then you have non-resident buying. That’s not going to affect Perth and it won’t affect Brisbane. Perth is too far in time zones from China, Brisbane is too hot. Sydney is going to be the spot where it stays and the others are going to continue going down.”
Australian auction results
Sydney recorded an 80 per cent clearance rate from 715 properties for auction, Melbourne cleared 76 per cent from 745 properties, Brisbane had a 65 per cent clearance rate from 85 properties listed and Adelaide cleared 48 per cent from 52 listed auctions.
Commercial property sector
National Australia Bank Limited (ASX:NAB)
will lift variable interest rates on interest-only home loans and line of credit facilities by 0.29 per cent in response to industry concerns about the pace of investor growth.
ANZ Banking Group (ASX:ANZ)
will increase its residential investment property loan interest rates by 0.27 per cent in response to changing market conditions.
Charter Hall Group (ASX:CHC)
has tied up the sale of its stake in a development site at La Trobe Street, Docklands in Melbourne for $31.5 million.
Summerset Group Holdings (ASX:SNZ)
has bought a new site in Parnell, Auckland with views to the city and close access to a rail network.