Several recent trends in the Australian housing market have created the perfect climate for investor activity which in some cases leads to a refinance situation. In fact, real-estate investors now make up a large percentage of the market because of the high returns and the potential to create a steady stream of revenue through rental homes.
According to the latest statistics from RP Data and Core Logic, home prices in the capital cities rose by 4.2 percent in the three-month span between June 1 and August 31, 2014. This is the highest winter increase in the last seven years. This rate also keeps the growth for the past 12 months in the double digits at 10.9 percent.
In a statement to ABC News Online, Cameron Kusher, a senior research analyst for RP Data, stated that it was very unusual for prices to remain so strong over the course of the winter.
“We thought that perhaps the momentum in the market was slowing, but today’s data shows that’s not the case,” said Kusher.
He went on to say that this marks the second year of strong house prices in the winter even though momentum slowed during the spring months.
“Last year we saw values increase by 4 percent in winter, which was abnormally strong at that time, and throughout spring, we saw values increase by about 3.5 percent,” Kusher stated. “Maybe we’ll see similar conditions again this year, but another 3 percent growth over the next three months is obviously very strong in light of the fact that we’ve already had about 28 months of growth in the housing market.”
The highest gains were made in Australia’s two largest cities: Sydney and Melbourne. In August, prices in Sydney were up by 1.8 percent while they were up 5 percent through the winter and 16.2 over the last 12 months. Although Melbourne only saw a 0.8 percent increase last month, the city experienced a rise of 6.4 percent this winter and 11.7 percent since last year.
Other markets with high gains over the winter include Adelaide, Brisbane and Darwin while the weakest markets were Canberra at 1.4 percent, Hobart at 2.8 percent and Perth at 3.5 percent.
Kusher believes that investors are driving the markets in Sydney and Melbourne. “It’s just the attractiveness of investing into the two largest housing markets we have, and also, those markets are seeing the strongest level of capital growth at the moment. Clearly they’re chasing that capital growth,” he said.