Australian house prices have increased real quickly after seven years in 2016, which was caused by high demand for properties due to record-low interest rates, and the price increases may be unsustainable, according to Bloomberg.
CoreLogic Inc. released data last month regarding the price increase. According to the data, the average dwelling value in Australia’s eight state and mainland territory capitals jumped to 10.9 percent last year, which is considered to be the biggest increase since 2009, higher than the 7.8 percent increase in 2015.
Moreover, the data provided revealed that there was a jump in the pace of growth that started during the first quarter of 2016, revealing average increases going nearer six percent. Last May and August, the Reserve Bank of Australia has cut interest rates to spur inflation and has depended on the increase of supply and more restricted lending regulations to help ease the housing market.
Michael Workman, a senior economist at Commonwealth Bank of Australia, stated in a note to clients that the data suggests rate cuts “had the side effect of boosting an already overheated housing market.”
Even though there was growth in other areas, there are others who experience a downfall. The houses in Perth dropped by 4.3 percent last year, while experiencing struggle due to the end of the mining investment boom, compared to 15.5 percent increase in Sydney.
Core Logic’s head of research Tim lawless said that the two-speed market in Melbourne was “most distinct,” wherein house and apartment value rose last year, with 15.1 percent and 1.7 percent, respectively.
“Concerns around unit oversupply have eroded buyer confidence,” he said.
There are instances where things that happen come with a catch; this is price increase in high demand are one of its examples. Property brokers victoria should stay vigilant with the demand of the people who want to move to Australia, but wants an affordable home, and to stay on guard of the warned unsustainable prices that come with it.
