New statistics have revealed Australia’s current top-performing city, but past market patterns indicate it won’t retain the title for long.
Melbourne house prices outperformed Sydney by 2.8 per cent in the quarter to October 2015, according to property data firm Residex.
Prices in Australia’s second largest city grew by 6.84 per cent to a median price of $729,500 over the quarter, according to a market update issued by Residex last week.
Sydney prices grew by 4.04 per cent – leading Residex to suggest that “Melbourne is coming into its peak growth rate”.
According to Residex, the reason for this assumption is that the east coast markets have previously followed a pattern of price growth and decline, with Sydney leading the growth period, followed by Melbourne and then Brisbane.
“An obvious example of this lead lag effect can be seen between 2003 and 2004 when growth in Sydney experienced a sharp decline, followed by Melbourne and then Brisbane,” the firm said.
Noting that changes to investor lending might have a disturbance effect on this price growth pattern, Residex predicted that price growth in Melbourne and Brisbane has only a few months left to run.
“Cyclically, Melbourne capital growth should cool in a few months then Brisbane may experience a peak in capital growth after that. Seasonally, summer should see lower growth rates, particularly in Brisbane where the market is susceptible to seasonality.”
Elsewhere in Australia, the ACT experienced an 8.3 per cent boost to house price values in the year to October – although this came with a cautionary note.
“A ‘boost’ in the ACT dwelling market followed the discovery of the dangerous exposure to asbestos in many homes. By June 2015, the government had purchased back 600 homes, which also contributed to increased activity in this market," the firm added.
“This action reduced the supply of housing and forced people to participate in the housing market with the money received from the sale of their property to the government.”