Best growth since 2010
AUSTRALIAN home values have posted their strongest quarterly gain since the end of the 2010 boom, but there are now signs growth may be beginning to moderate.
The new figures come as residential construction activity staged its first rally in three months and debate rages over whether the record low interest rate is creating the conditions for another property boom that could markedly worsen housing affordability.
The national dwelling value rose 4 per cent in the three months to August, the highest rate of capital gain since April 2010 - right before the last boom began to fizzle, according RP Data-Rismark.
Sydney dwelling values shot up 5.4 per cent over the quarter, while values in Melbourne rose 4.8 per cent. They increased 3.7 per cent in Canberra, 3.4 per cent in Darwin and 3.1 per cent in Perth.
But the analyst group has also identified a slowdown in the market’s performance in August alone.
The national dwelling value rose just 0.5 per cent over the month, thanks primarily to softer conditions in Sydney and Melbourne.
Values rose 0.6 per cent in Sydney, 0.2 per cent in Melbourne, 0.7 per cent in Darwin and 0.9 per cent in Canberra. Brisbane was the stand out performer for August, posting a rise of 1.5 per cent. Falls of 0.2 per cent were recorded in Perth and 1.9 per cent in Hobart.
‘‘We’ve had a really strong June and July but a more moderate August,’’ said RP Data analyst Cameron Kusher. ‘‘It’s definitely the low interest rates that’s driving this activity.
‘‘The thing from here will be what happens in spring. It’s looking like a pretty good spring selling season - the amount of stock on the market is fairly low and clearance rates are quite strong.’’
Louis Christopher, managing director of SQM Research, said the country had seen its strongest winter market in years and it was set to continue for spring.
‘‘I’m still convinced its a very strong market out there, particularly for Sydney.’’ Signs of recovery in construction There are also some tentative signs of life in Australia’s residential construction sector, with the total number of dwelling approvals jumping 10.8 per cent in July, seasonally adjusted. It’s the first rise in three months for what is a key indicator of the health of the economy.
The surge has surprised analysts, who were tipping a 4 per cent increase.
However, much of the strength was seen in the apartment market, where building approvals rose 24.4 per cent compared to 3.9 per cent for detached homes.
In Victoria, unit approvals soared 70 per cent but house approvals fell 1 per cent.
‘‘The big lift this months seems to have been caused by a few large apartment project approvals, particularly in Melbourne and Canberra,’’ said MacroBusiness economist Leith van Onselen. ‘‘If you remove the lumpiness of the apartment market it’s still a pretty soft uptrend.’’