Property prices up in September quarter

Melbourne, Sydney and Brisbane property prices rose slightly in the September quarter, RP Data figures reveal.

Sydney led the way with a 4.1 per cent rise in the median house price for the quarter; Melbourne and Brisbane recorded rises of 3.7 and 0.6 per cent respectively, according to the figures released this week.

While median house prices in the capitals were relatively flat in September, it followed the strongest winter-month price rises since 2007. September’s largest year-on-year increases were in Sydney (14.3 per cent), Melbourne (8.1 per cent) and Brisbane (6.4 per cent).

RP Data’s research head Tim Lawless said even though property market conditions remained buoyant, the 12-month trend across Australia’s capital cities had drifted lower since peaking at 11.5 per cent in April.

“The softer September result is likely to be seen as a positive indicator by the Reserve Bank, which has recently raised concerns about the level of value growth and speculative investing in the Sydney and Melbourne housing markets,” Mr Lawless said.

Mr Lawless said however most of Australia’s capitals had recorded sustainable rates of property price appreciation.

“At their peak, on a rolling annual basis, capital-city dwelling values increased at a faster pace over each of the previous three growth cycles in 2009/10, 2007 and 2001/03,” he said.

It is a view shared by Portfolio Management Services’ managing director Jock Bing, who said the company’s acquisitions team was still able to find investment property that fit its criteria for successful property investment.

“Current prices are strong and property bargains are harder to find but they are still out there to be found,” he said. “So I have to disagree with the theory of unsustainable property prices or a bubble and I don’t believe there is any need for any macro controls on lenders.”

An acceleration in bank lending to property investors has prompted the RBA to threaten the use of macro-prudential rules to curb house price growth driven by property investment.

Recent speculation has included claims the RBA would restrict banks to lending a maximum of 80 per cent of the property price for investment properties, or even target lending for buying investment properties in Melbourne and Sydney.

Mr Bing said while he doubted such measures would be introduced, he had always advocated buyers have as large a deposit as possible.

“For first-time investors, I recommend a 30 per cent deposit, for second purchases this can be eased back to about 20 per cent and from there on, it’s a matter of spreading the total debt across the whole portfolio,” he said.

“As each property increases in value and as rental incomes grow, the portfolio can usually support new purchases made with lower deposits.

“… Experienced investors always build in a buffer against rising interest rates and stalled rental incomes; it’s called sensible investing.”

To find out more about Portfolio Management Services’ successful investment formula, or to discuss your property investment goals, call Portfolio on (03) 9621 1044 today.