ABS data confirming the accelerated growth of the residential property market in late 2016 shouldn’t come as a surprise, according to the Housing Industry Association.
“This result for the December 2016 quarter shouldn’t surprise anybody. Nor should the large divergence in growth rates between Australia’s eight capital cities,” HIA chief economist Harley Dale said.
The results showed that the growth rate for attached properties was slower than that of standalone houses, and Sydney and Melbourne were surging ahead of other states.
“Sydney and Melbourne represent 40 per cent of Australia’s population and some concern regarding the trajectory of house price growth in these two markets is warranted,” Mr Dale said.
“Elsewhere, people still scratch their heads when it comes to a supposed housing price ‘boom’ because that simply hasn’t been their experience this cycle, even allowing for some recovery in prices in recent times.”
The findings support the suggestion that the market is not country-specific, and instead vary from state to state. The ‘Australian property bubble’ is not evident in the ABS data, something economists have been saying for a while.
“On the same day as we have received an update on dwelling prices, there has also been speculation regarding some tension between members of Australia’s Council of Regulators, plus an appropriate questioning of banks’ out-of-cycle interest rate hikes,” Mr Dale said.
“People can make of that what they will, but let’s not lose sight of the main goal. Yes, there is some need to tighten lending conditions for some Australian housing markets in terms of geographical areas and dwelling types. However, a blanket tightening of lending conditions – as now seems to be emerging again – is the wrong policy and risks damaging Australia’s financial stability. That is the very opposite to the ideal outcome authorities want to achieve.”
Over the year leading up to the December 2016 quarter, Melbourne remained the strongest market with 10.8 per cent growth, followed by Sydney with 10.3 per cent. Tasmania’s market was also strong, with 8.8 per cent growth, followed by 5.5 per cent in the ACT and 3.8 per cent in Queensland.
Western Australia and the Northern Territory continued to see decreases of -4.1 per cent and -7.0 per cent respectively.