Over winter, Australian capital home prices felt the biggest rise in seven years for this season, according to the latest RP Data CoreLogic Home Value Index.
For those pondering property investment, not to mention those with existing rental property interests, the news is sure to be welcomed. Growth in prices is particularly great news for those focussed on a long-term capital growth strategy.
While house values have increased by 18.7 per cent over the present growth phase, which has been running for 19 months, there are some particularly strong players.
Sydney and Melbourne came first and second, respectively, for house price growth over the current growth cycle. In Sydney a 27.2 per cent lift in house prices since June 2012 has been a boon for property owners, while Melbourne's 19.5 per cent growth rate over the same period is also a favourable figure for Australian property investors.
"A longer term and retrospective outlook shows that the strength in the housing market has really been all about Sydney and Melbourne - from the market peak in March 2008, to its low point in December 2008, combined capital city home values fell by 6.1 per cent. From that point, values once again began to increase," said RP Data Senior Research Analyst Cameron Kusher.
Why do people go east?
Many people are wondering what makes Sydney and Melbourne such great picks for purchasing property.
Competitive interest rates are a nationwide phenomenon, but still boost the attractiveness of investing in these vibrant capitals, RP Data explained.
"The comparatively stronger value growth between 2009 and 2012 in Sydney and Melbourne means home owners have the equity to purchase investment properties or to upgrade from their current home," stated RP Data.
Finally, for eight of the last 10 years, both capitals have recorded the most significant population increases of all cities. With a population boost comes a demand for quality housing, opening up plenty of viable opportunities for those looking to invest.
How long will these conditions remain?
A key factor in investors' willingness to purchase rental properties is whether the official cash rate (OCR) will remain at record lows.
Reserve Bank of Australia (RBA) Governor Glenn Stevens recently commented on the RBA board's decision to retain the low 2.5 per cent OCR.
"On present indications, the most prudent course is likely to be a period of stability in interest rates", he said on September 2.
"Looking ahead, continued accommodative monetary policy should provide support to demand and help growth to strengthen over time."
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