With housing prices headed up, the start of this year found many experts predicting the growing price tag on houses in Australia would start to diminish further into the year.
While everyone on the market for a new home hoped that these predictions were true, we now find ourselves well into 2016 with no sign of a slowdown in the market. In fact, the price of houses has continued to steadily rise.
Australia Sees Some Small Relief in June
According to CoreLogic’s statistics, capital city house prices rose 0.5% during the month of June, which made the quarterly increase 3.8%.
From June 2015 to June 2016, house prices rose 8.3%! However, June wasn’t the month with the greatest spike; instead, April and May saw gains of 1.7% and 1.6% on housing prices. After increases like that, the jump in June felt almost like a relief!
Which Australian Cities are Affected
According to research, most of the expensive home prices came from the Sydney.
During the month of June, Sydney alone saw house prices grow by 1.2%, taking the city’s quarterly increase to 6.8%. Obviously, the Sydney is taking the excessive home prices the hardest.
In fact, the annual growth rate in is now 30% and since the start of 2009, prices of homes in Sydney have skyrocketed a jaw-dropping 87.9%!
Melbourne, which has been the city with the fastest rise in prices on housing over the past year, may soon be replaced by Sydney. As of now, Melbourne’s price growth stands at 11.5% while Sydney is making gains of 11.3%.
Is There any Sign of A Slowdown?
Since house price growth in June was down compared to other months, CoreLogic’s Asian Pacific research director, Tim Lawless, is suggesting that even though prices are still inching up, the reduction in rates is going to be a welcome sight to those who are policy makers and regulators in the state and federal governments.
With the increase in prices comes an increased concern about a sustained rebound in capital gains.
Although Mr Lawless is suggesting that the slight decline in price growth is going to be a welcome change, others are not so sure.
Some experts point out the reason that the housing price slowed was due to weaknesses in other Australian cities.
Rather than just being a welcome relief to those on the market for a new home, the decline was brought on by financial problems in other areas of the country, and should not be considered a sign that prices are about to drop.
As of now, there are few to no signs that Sydney and Melbourne are going to see a decline in house prices; instead, all evidence points that they will continue to rise.
Frightening News for Home-buyers in Sydney
CoreLogic recently collected data from the Australian National University that shows Sydney’s house price to income ratio at 8.2 while Melbourne stands at 6.8.
This information shows that it takes 8.2 times one household’s average income to pay for an average home in Sydney.
This is frightening news for anyone who is looking to purchase a home in this key city of Australia.
Signs of Lower Prices in the Future?
Lawless suggests that house prices will have to come to a halt and start declining since these affordability challenges are going to make it impossible for buyers to purchase in these towns.
Due to the high cost of a home, Lawless says that Sydney is seeing houses stay on the market for longer and vendors are working extra hard to discount their prices in an effort to gain sales.
Last year, a typical home in Sydney took approximately 26 days to sell. With the increased rates, the same house will now stay on the market for 40 days. Discounts have risen from 5.5% a year ago, to 5.6% now.
While those selling homes are enjoying the chance to make some extra money, a decrease in housing prices will ultimately affect everyone positively.
With the high prices now, many people are worried about the risks it may have on the entire economy of Australia.