Latest dwelling price figures from the Australian Bureau of Statistics indicate that the gap between the growth rates in the eight capital cities has widened.
Over the year to June 2015, the ABS Residential Property Price Index rose by 9.8%, with a 4.7% increase occurring during the June 2015 quarter itself. Annual house price growth was 10.5%, with prices in the attached dwelling segment increasing by 7.5% over the same period.
The variation in dwelling price growth across Australia’s capital cities is remarkable.
On the one hand, price growth is very robust in both Sydneyand Melbourne, while prices have actually eased back a little in cities like Perth and Darwin.
The wide divergence of dwelling price growth across the capitals is indicative of the mixed economic conditions across Australia. It highlights the challenges in prescribing ‘one size fits all’ policy responses to the housing market.
The strength of dwelling price growth in Sydney is receiving much attention. However, the upturn in Sydney prices follows a decade which saw the city lag far behind the other seven capitals in terms of price growth.
Price pressures ultimately represent the inadequate response of supply to much stronger demand conditions. We need to see more flexibility in the planning process and in the release of new residential land in order to take the heat out of prices.
In the year to June 2015, dwelling price growth was strongest in Sydney (+18.9%), followed by Melbourne (+7.8%) and Brisbane (+2.9%). The pace of dwelling price growth was more modest in Canberra, (+2.8%), Adelaide (+2.7%) and Hobart (+1.5%). Over the same 12 month period, dwelling prices actually declined in both Perth (-1.2%) and Darwin (-1.8%).
Shane Garrett is senior economist for HIA and can be contacted here.