Thursday 23 November 2017

Investors driving Australian house price rises

RP Data, a property research firm, reports that Sydney saw the largest housing price rise in Australia last year with a 14.5% increase, while prices were up 9.9% in Perth, 8.5% in Melbourne and 5.1% in Brisbane.

Investors driving Australian house price rises

Australia's property boom has spread beyond Sydney and its suburbs. Photo: Globe Image

January 22, 2014

Nationally, house prices rose almost 10% in Australia in 2013, the strongest gain since 2010 according to RP Data.

The research confirms that the housing boom in Australia, once thought to be limited primarily to central Sydney, is spreading to other parts of the country.

Fuelling demand for property are both large and small investors looking for yield amid low interest rates engineered by the central bank to keep the economy growing.

A recent report from the Australian Bureau of Statistics showed the value of home loans approved in November rose to A$26.9 billion, a 15% increase from a year earlier.

AMP Capital reports that over 46% of the loans in November last year went to investors, compared with 43% a year earlier, and first-time buyers accounted for only 12.3% of the loan volume, the lowest level in more than two decades.

The price increases have re-opened a debate over whether the Reserve Bank of Australia should raise interest rates to keep the market from overheating.

The bank has been keeping rates at a record-low 2.5% to aid an economy that is slowing as a decade-long mining boom wanes.
Although bank officials say a housing bubble isn't emerging yet, arguing the rate of house-price increases is in line with income gains, some analysts say investors are more likely to bail-out in any downturn in the market.

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