Sydney and Melbourne have recorded strong annual price growth that has continued to leave the smaller capitals far behind.
A new report by the Real Estate Institute of Australia (REIA) and Bendigo Bank shows a strong correlation between growth and population during the 12 months to 30 September, 2014.
Australia’s two most populous cities recorded double-digit growth, the middle-tier capitals recorded moderate growth, while the smaller capitals struggled to keep pace with inflation.
Sydney’s median house price reached $844,000 at the end of September, which represented annual growth of $121,300 or 16.8 per cent. Melbourne jumped by $59,000 or 10 per cent.
Perth grew 5.9 per cent to $535,000, Brisbane rose 5.3 per cent to $466,000 and Adelaide climbed 3.9 per cent to $413,000.
Canberra was up 2.9 per cent to $525,000, Hobart rose 2.3 per cent to $360,000 and Darwin grew 0.8 per cent to $610,000.
However, the quarterly results tell a different story. Sydney climbed 3.8 per cent and Melbourne remained flat, while prices in the other six capitals fell.
REIA chief executive Amanda Lynch said the results are timely given the increasing likelihood that the Reserve Bank of Australia will cut interest rates next year.
“The prospect of not only continuing low interest rates throughout 2015 but also the possibility of a cut should stimulate much activity in the housing market, with this report… showing the cooling market provides an ideal time for investors and first home buyers alike,” she said.
“With moderating prices in all capital cities except Sydney and Melbourne, first home buyers, in particular, should feel confident in being able to enter the market.”