Australian real estate shows no sign of slowing down, with 79 per cent of auctioned properties sold last weekend.
That is the second highest level in data going back nearly seven years, with the record set in September 2009 when the Federal Government’s First Home Buyers’ Boost scheme was boosting demand.
However, those figures from CoreLogic RP Data are dominated by Sydney and Melbourne, because they are the only two major cities where a substantial proportion of sales happen by auction.
The real estate analysis firm’s data show prices are up 6.4 per cent in Sydney so far this year, compared to 3.9 per cent gains in Melbourne, a 0.1 per cent rise in Brisbane, a 0.2 per cent decline in Adelaide and a 1.6 per cent slide in Perth.
Property analysts, such as Louis Christopher from SQM Research, say that most other data confirms that Sydney is where the main action is taking place.
“At this point in time we think the [Sydney] market’s about 25 per cent overvalued and, if our forecasts come in for this year, it’ll actually get up to about 40 per cent overvalued,” he told ABC television’s The Business program.
“It’s probably about the second highest overvaluation point we’ve ever recorded, the highest being back in 2003 when, on our numbers back then, the market was about 55 per cent overvalued.”
Australian banks as safe as houses
The Australian banking system has at least 60 per cent of its lending in home mortgages, concerning some analysts.
Mr Christopher said that, beyond Sydney and some parts of Melbourne, there is generally not much upward momentum in the Australian housing market.
“We don’t believe, for example, there’s a national housing bubble,” he said.
“We can definitely pinpoint areas where the markets have not moved for a very long time and they are undervalued compared to incomes.
“So, even with the cheap credit, it hasn’t influenced every market everywhere, because local economic factors have taken a greater hold.”
Mr Christopher points to collapsing home prices in most mining towns, falling prices in Darwin and Perth, and relatively stagnant prices over recent years in Brisbane, Adelaide, Canberra and Hobart as evidence.
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