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Property prices continue to surge in 2016, report shows

By Monica Boyd

Property prices have showed no signs of abating, with Sydney and Melbourne apartment and house prices surging over the latest quarter, data released on Friday shows.

In the three months to June, property prices surged 6.8 per cent in Sydney and 3.5 per cent in Melbourne, CoreLogic’s monthly house price index recorded.

The renewed property market enthusiasm was likely a result of an interest rate cut in May and pre-election investment activity, CoreLogic head of research Tim Lawless said.

Property prices have continued to rise, CoreLogic data shows. Photo: Henry Zwartz

“A lot of the growth was fuelled through April and May, but Sydney’s June growth was exceptional after a moderating trend until early-2016,” Lawless said.

“We thought last year was the last hurrah, but there has been growth again. However, we’re not back to the frothy times of halfway through [2015] and we’re well below the peak of July last year,” he said.

While both Sydney and Melbourne dwelling prices have increased by about 15 per cent over the year to June, Melbourne’s property price growth had materially slowed.

 Apartment prices increased 1.1 per cent over the quarter in Melbourne, while house prices were up 3.8 per cent. Sydney apartments and houses both increased  more than 6.7 per cent.

“It’s a fairly new phenomenon [to see Melbourne slowing faster than Sydney], particularly as affordability is better in Melbourne and there isn’t the same barrier for home buyers,” he said.

“We’re probably seeing the effect of some uncertainty around oversupply conditions permeating into the Melbourne market.”

Hobart was the only other capital city to record an increase overall, up 1.8 per cent over the month, with all other capital cities seeing property prices fall. Darwin was the weakest capital city over June, down 1.6 per cent.

The Sydney and Melbourne results were not surprising, particularly after a month of strong auction clearance rates, Domain Group chief economist Andrew Wilson said.

“Auction clearance rates increased in every capital city [in June] except for Melbourne, which was flat,” Wilson said.

“We would expect to see house price growth following these results.”

Sydney’s auction clearance rate increased to 71.7 per cent over June, compared  with 69.2 per cent in May, Domain Group data shows. One year ago, the auction clearance rate was above 80 per cent.

And the strong fundamentals of Sydney and Melbourne’s property markets would ensure continued stable growth, St George senior economist Hans Kunnen said.

“In Sydney, there’s population growth and a previous lack of supply that’s still behind demand,” Mr Kunnen said.

“Sydney’s auction clearance rates are still right up there and have barely deviated from the low-70 per cent.”

While Melbourne may be experiencing some overall oversupply, the city has “pockets that are undersupplied that are seeing growth,” he said.

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