Figures to be released by CoreLogic RP Data on Monday will show that once again Sydney and Melbourne’s property market performed strongly.
Dwelling price growth in Melbourne is expected to hit a record high in July with property values rising 4.8% in the last 30 days, up from 2.9 per cent growth in June.
In Sydney, house prices are expected to rise 3.2% for the month, compared to 2.8% in June.
However it’s likely Monday’s figures will show property price growth outside the two cities remaining weak.
CoreLogic researcher Tim Lawless said the rest of Australia’s capital cities were expected to record flat results, with Adelaide home values set to recede.
“Growth over the last quarter has been very strong despite the May figures being very soft,”
“The monthly figure can be volatile, so we prefer to look at the trend, but even that looks quite strong.”
Housing affordability deteriorates
The big increase in home values is likely to generate more concerns about housing affordability.
The HIA Affordability Index fell in the June 2015 quarter, signalling a deterioration in affordability conditions.
HIA Chief Economist, Dr Harley said:
“The positive impact of a second interest rate cut for the year in May was overwhelmed by an increase in the CoreLogic RP Data median dwelling price and the persistence of sluggish earnings growth
The net negative impact of these factors saw the national HIA Affordability Index fall by 2.9 per cent to 79.7 in the June 2015 quarter.”
However the index masks wide variations around the country, Dr Dale said.
Sydney and Melbourne drove a 3.6 per cent decline in affordability in capital city markets, while there was a 2.7 per cent improvement in regional Australia.
Dr Dale said:
“The large differences in the results for the capital city affordability index and its regional counterpart, together with the variation in outcomes between capital cities, exposes the folly of sweeping generalisations which refer to an Australian housing boom,”
“That is simply not what is occurring — in many parts of Australia the extremely low interest rate environment is delivering historically favourable affordability conditions.”
Earlier this month the Reserve Bank said housing affordability issues weren’t particularly alarming, with home ownership rates neither “unusually high nor unusually low” compared to other countries.”