Rumours of a boom greatly exaggerated

Rumours of a boom greatly exaggerated

Posted on Wednesday, October 08 2014 at 4:36 PM

One industry group has raised concerns the thriving Sydney property market is driving commentary and policy for all Australian real estate.

The Housing Industry Association (HIA) has released analysis suggesting
not all markets are operating at the same level.

The HIA’s A
Portrait of Australian Home Prices
report says after accounting for
inflation, capital gains have been subdued across most capitals.

“In real terms,
dwelling price growth has been at a single-digit rate in every capital city
over the past year, with the exception of Sydney.

“Outside of Sydney and
Melbourne, real dwelling price growth was just 2.2 per cent in the year to June

The report also notes
housing affordability has remained reasonably flat across most markets.

“For example, in
Sydney the dwelling price to household earnings ratio is about the same as a
decade ago, but has increased over the past two years.

“In Melbourne and the
other six capital cities, the ratio is lower than it was four years ago.”

The analysis is in
response to suggestions policy should be introduced to slow the housing boom,
with the HIA highlighting most commentary is too general.

“…much of the
public discourse around the current housing price cycle tends to
over-generalise and imply that strong growth is considerably more widespread
than is actually the case.”

The HIA notes that price growth and transaction volumes have
been strong in Sydney and Melbourne.

“It is also the case that these two capitals combine to
account for around 40 per cent of Australia’s population.

“That leaves about 60 per cent of the population where home price
growth is relatively modest, as exemplified by the
analysis in this paper.”

A copy of the report can be found here.

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