Australian house prices have jumped in May following a comeback of the Sydney property market.
House prices across the combined capital cities rose 1.6% over May, taking values 5% higher over the calendar year to date.
The strong May growth was largely the result of a jump in Sydney house prices, which increased by 3.1% over the month, following capital growth of 2.4% in April.
A rise of more than 1% month-on-month was also recorded in Melbourne (1.6%), Canberra (2.5%) and Hobart (2.2%). Perth was the only city to record a fall in dwelling values over the month, down 2.7%.
The annual rate of house price growth across the combined capitals has rebounded to 10%, after experiencing a trough in December last year at 7.4%. Sydney house prices are now 13.1% higher than a year ago but Melbourne’s housing market is still recording the highest annual rate of capital gain at 13.9%.
Brisbane has experienced annual capital gains of 7.1% followed by Hobart (6.1%), Canberra (5.7%) and Adelaide (3.9%).
Perth and Darwin house prices have both head backwards over the year, decreasing by 4.2% and 3.5% respectively.
CoreLogic RP Data head of research Tim Lawless speculates investors may be behind the jump in Sydney house prices.
“The extent to which investors are fuelling the latest surge in Sydney home values is difficult to quantify, however housing finance data to March shows investors, as a proportion of all new mortgage commitments, have been trending higher since reaching a recent trough in November last year at 42.9%,” he said.
“The March data shows investors now comprise of 47.6% of all new mortgage commitments which is the highest proportional reading since August last year. Anecdotal evidence suggests investor numbers may have increased further from this time, with some lenders reversing the tighter lending requirements that were previously in place for investment purposes as growth in investor related credit tracks well under the APRA speed limit of 10% per annum.”
Lawless added that the number of events across CoreLogic’s valuation platforms, which account for more than 95% of all bank valuation instructions, are up 6.7% over the past 28 days. He said this signals increases in mortgage related activity, which could potentially further drive up house prices.