Home bonanza as prices rise by $500 a day
October 2, 2013
The typical Sydney house price soared by more than $500 a day last month as property prices surged amid historic low interest rates and buyers' fear of missing out.
The median Sydney house price rose more than $16,000 in September, new figures show. Home values in Australia's most expensive city jumped 2.5 per cent last month alone - and 5.2 per cent over the quarter - bringing the median house price in Sydney to $665,000, the RP Data-Rismark Hedonic Home Value Index found.
The news came as the Reserve Bank kept its cash rate at a historic low of 2.5 per cent on Tuesday, amid signs previous rate cuts were helping to stimulate the economy.
Analysts said the Reserve gave little away about its intentions. While the bank appeared unlikely to raise rates soon, it also did not indicate if it would cut them again.
Property prices have been rising all year but the increases have intensified in the past few months as buyers have poured in. Weekend auction clearance rates in Sydney have been above 80 per cent for 11 of the past 12 weeks, data from the Fairfax-owned Australian Property Monitors shows.
Responding to the spike in sales, the nation's biggest home lender, the Commonwealth Bank, has cautioned buyers against making hasty decisions.
Research commissioned by the bank found most home buyers believed property prices were being fuelled by a fear of missing out, which was causing most to rush in before they had done their ''due diligence''.
"A competitive market place is always going to increase buyers' fears of missing out but it is important that buyers don't rush the process as this might give them cause for regret down the track,'' said Clive van Horen, Commonwealth Bank's general manager of home loans.
Timothy Sharp, a clinical psychologist, said: "Frustration and a fear of missing out are typical reactions associated with the complexity and importance of buying a property. It is, however, the biggest financial decision most of us will ever make so it's crucial that the decision is a rational one.''
Other economic data from Tuesday showed retail sales rose by a seasonally adjusted 0.4 per cent in August, surpassing expectations of a 0.3 per cent rise. Meanwhile, activity in the manufacturing sector lifted for the first time in two years as a result of the falling Australian dollar and lower rates.
RP Data research director Tim Lawless said if property price growth continued on its present course home owners could expect gains of up to 20 per cent over the next 12 months. ''While this scenario is unlikely to occur, if such a high rate of growth continued for a sustained period, it would have the potential to push home values above what might be considered sustainable market value."
Mr Lawless described the housing market as being in a ''technical recovery'', after combined capital city values fell 7.4 per cent from October 2010 to May 2012. Since June last year they have climbed 8.7 per cent to be at their highest point. But he said these gains were largely due to the strong performance of Sydney and Melbourne.