Property values have been rising steadily over the last year, with Sydney a front-runner, followed by Melbourne. Key industry commentators and decision markers have been weighing in on the value growth across the country, with one commentator pointing to rising equity.
Sydney property is in hot demand, with dwelling values lifting 16.2 per cent year-over-year to August 31, according to the RP Data CoreLogic Daily Home Value Index. Of this, house values experienced more dramatic growth (17.16 per cent) than units (12.06 per cent).
In Melbourne, residential property values rose 11.65 per cent over the same period. Again, house values grew more significantly than units, with 12.37 per cent year-over-year growth, compared with 6.21 per cent growth in the unit market.
These growth trends have been a boon to those selling property, however it appears that is not what all real estate owners are doing.
The role of equity
RP Data Senior Research Analyst Cameron Kusher has suggested the level of equity in Australian homes is one driver of rising values.
"With many economic indicators heading in the wrong direction it seems counter-intuitive that home values would continue to rise as strongly as they are," he said.
Mr Kusher noted that only 5.2 per cent of overall dwelling stock was sold over the last 12 months, based on Australian Bureau of Statistics and RP Data dwelling figures. Accordingly, he has suggested that equity has risen, alongside growing property values.
Those with sufficient equity in their properties - whether as homeowners or investors - are well tipped to make further investments. Mr Kusher noted that investors have been focussing on residential housing, with Sydney and Melbourne key cities for Australian property investors.
Where to from here?
It's not just sufficient equity that encourages Australians to invest in property.
Low interest rates have been hanging around for many months now, and the Reserve Bank of Australia (RBA) has indicated this trend will stay in place for some time.
The minutes of the RBA's most recent monetary policy meeting indicate "ongoing stability" in interest rates is the best course of action.
"[A] wide range of indicators showed that conditions in the established housing market continued to strengthen [during the June quarter]," the RBA board stated.
"In particular, housing prices had been rising at a rapid pace and auction clearance rates were above average levels. Housing credit had continued to grow at an annualised pace of around 7 per cent, with investor credit a particularly strong component."
A strong property market continues makes real estate investment a popular choice among Australians.
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