Core Research has announced a 3.7% rise in Australia’s housing market prices since January. Sydney dominated the Australian property market, with the highest increase of 5.3%, with Melbourne close behind with a respectable 4.4% rise. Only Perth has recorded a decrease in housing prices, which fell 1.1%.
Sydney has long held the title of Australia’s most unaffordable real estate market. Australia’s most populated city is second only to Hong Kong in the competition for the less-than-salubrious title of the world’s most expensive real estate. January 2017 saw Demographica’s Annual Index report our five major cities as “severely unaffordable” for the 13th time.
National auction clearance rates were back in competitive form with a jump from to 77.1% this week, up from 74.1% the previous week. This represents a 7% rise on the figures of the same week last in 2016, which clearly refutes any notions of a predicted housing market slump.
Sydney was unsurprisingly the clear winner last week with an auction clearance rate of 81.1%, Melbourne followed up with 79.9%, Canberra scored 78.4%, Tasmania at 74.1%, and Adelaide with a healthy 68.2%. Perth and Brisbane were less successful with below half of the auctions settling during the following week. Clearance rates were 44% for Brisbane and 30.8% for Perth.
With 3,147 auctions taking place last week across the nation, the realty sector has recorded its second highest figures this year. This figure represents a large jump from 2,916 the previous week.
“We have a housing crisis despite having the most abundant land resources in the world. And who’s accountable? No one. It’s all care and no responsibility for the politicians and regulators. There’s certainly no one bold enough to take the RBA to task. If there is one regulatory institution that deserves greater scrutiny, it’s the RBA. Their influence on the economy is profound,” said Mr Canavan.
He goes on to blame the RBA for twice lowering interest rates since mid 2016 and reigniting the housing boom. Canavan warns that, with 60% of all mortgages written in the past year being interest only, Australia’s housing crisis could imitate the U.S. debacle in early 2000s. Adjustable rate mortgages fuelled that crisis with interest rates finally rising and the market imploding.
To put it in perspective, a dilapidated house in Camperdown (Sydney’s tightly held inner West that was once a no go zone) sold in four minutes at auction on the weekend for $1.9 million. Market predictions are indicating that a smaller apartment in the same suburb might only cost approximately $200,000 less than the proceeds of the larger house sale.
ASIC chairman Greg Medcalfe is concerned that the problem will only continue to grow.
“I’ve been saying for a while, having lived through many residential mortgage markets, that I thought it was a bubble for a while, other people are catching up now,” Mr Medcalfe said.