House prices rise as investors make a comeback

by John Maguire04 May 2016
Australian house prices rose in April, according to the CoreLogic RP Data Home Value index, with analysts suggesting that the return of investors to the market has been a factor in the increase.

The CoreLogic data shows that across Australia’s capital cities, house prices rose by 1.7% in April from the previous month. The figure marks a slight increase on the 1.5% released as a preliminary forecast by CoreLogic last week.

CoreLogic RP Data research director Tim Lawless said, “The annual rate of growth in Sydney peaked at 18.4 per cent in July last year and has since moderated back to slightly less than half the peak rate of growth, at 8.9 per cent over the most recent 12-month period.”

Prices in Sydney rose 2.4% in April, with Melbourne prices increasing by 1.1%. Growth in Brisbane and Adelaide was above 2% for each, while Perth experienced an increase of 0.5%. Hobart and Darwin were the only capitals where prices fell.

According to ANZ analysis, investment lending is making a significant return following an initial falling away as a result of increased regulation in 2015.

Investors make up 46% of all new mortgages, according to CoreLogic.

“Improved sentiment looks to be supporting demand and therefore prices of housing,” said David Cannington, senior economist at ANZ. "However, the standing regulatory cap on investor lending growth will limit the positive impact on sales and price growth compared to previous cycles."

It is likely, therefore, that growth will remain moderate.
 
"We are not in a boom phase," said Cannington. "The [combined] 1.7 per cent comes after relatively flat conditions in the previous three months. It is probably statistical clawback.”
 

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