A new report shows almost half of all homes sold in Australian capital cities over the past year were purchased above the asking price.
The report by Aussie Home Loans and RP Data found that in the 12 months to June 30, in capital cities 43.6 per cent of houses and 46 per cent of apartments sold for more than their initial list prices.
For city and country areas the national average of properties selling above list price was a lower 32.8 per cent for houses and 37.2 per cent for units.
Unsurprisingly, Sydney recorded the highest proportion with 59.4 per cent of houses and 63.6 per cent of units sold above their list price.
This was followed by Melbourne at 50.4 per cent and 45.4 per cent, respectively.
Aussie executive chairman John Symond said the report shows strong momentum in capital city markets, which bodes well for sellers in spring – traditionally the most active property season of the year.
“Although value growth has been relatively weak to date in Brisbane, Adelaide and Hobart, these three cities have recorded the largest year-on-year jump in sales, which could be a pre-cursor to a greater pick-up in value growth as demand for housing rises,” Mr Symond said.
“The new report also shows that city markets are much stronger than regional areas.
“For those looking for capital growth, the theme clearly indicates that capital cities are the places to invest, while regional areas are more about lifestyle than returns.”
The findings of the report signify that the demand for real estate is strong, leading to speculation over a potential property bubble.
AMP Capital chief economist Shane Oliver said that while Australian house prices are overvalued – now 13 per cent above their long-term average – credit growth is a long way from bubble territory.
“Over the year to February, housing related credit grew 5.8 per cent,” Mr Oliver said.
“This is up from recent lows, with 7.6 per cent growth in credit for investors leading the charge but pretty tame compared to 2003/2004, when housing-related credit growth was running at 20 per cent-plus and 30 per cent for investors,” he said.
“Related to this, we have yet to see much deterioration in bank lending standards.”