Good news for property investors.

Melbourne house prices see strong start to spring

Both Sydney and Melbourne’s property markets have experienced encouraging results in the first month of spring.

In September we saw prices increase 1.7% in both capital cities, making it the largest monthly gain in two-and-a-half years across the national market of 0.90%.

However property values in Adelaide and Brisbane remain flat with Darwin, Perth and Hobart showing further decreases.

Capital city

Month

Quarter

Annual

Sydney

1.7%

3.5%

-4.8%

Melbourne

1.7%

3.4%

-3.9%

Brisbane

0.1%

0.5%

-2.1%

Adelaide

0%

-0.6%

-1.1%

Perth

-0.8%

-1.9%

-9%

Hobart

-0.4%

0.4%

2.5%

Darwin

-0.2%

-1.1%

-9.5%

Canberra

1%

1.4%

1.3%

Combined capitals

1.1%

2.2%

-4.3%

Despite the broad upward trend in FY2020 so far, the national index still remains 6.8% below the peak of October 2017, suggesting buyers still have time to take advantage of improved affordability before prices return to the previous highs.

It appears the strong performance is credited to historically low interest rates and improved credit access, but Victoria and NSW are benefiting from certain economic and demographic conditions not found in the other states. For example higher population growth and lower unemployment.

Historically Victoria and NSW have the highest demand for investor mortgages. We are seeing a two-speed track, with changes to interest rates, improved credit assessments and the re-election of the Coalition not having a uniform impact across the country. For example, the median house price in Sydney is now $900,000 that is almost twice that of Perth’s.

Whilst there is a lot of momentum in the market and with all of the forward indicators suggesting further price rises – we warn investors that with record household debt levels the property sector is vulnerable to a shock or change in household circumstances.