Adelaide and Darwin lead other capital cities in recording strong growth in the real estate market.
But analysts warn that the rate of growth is slowing rapidly across the nation and could flatline by year’s end.
Preliminary estimates from the Australian Bureau of Statistics show the average price of established housing in the eight capital cities rose an average 3.1 per cent in the March quarter.
Sydney and Melbourne led the way with sharp rises of 4.9 per cent and 3.6 per cent respectively. It was the fifth consecutive rise in the eight capital cities index.
For the full year to June, overall average house prices rose 18.4 per cent, and the ABS said the average price rise of 21.4 per cent in Sydney was the largest rise since it began recording these figures in 2002.
Adelaide and Darwin recorded quarterly growth rates of 3.2 per cent and 2.8 per cent respectively, Perth 0.4 per cent and Brisbane just 0.3 per cent.
But the data also revealed the rate of growth in capital cities peaked at 5.5 per cent in the December quarter last year, after rising from negative territory during the economic downturn, and was now steadily falling.
Senior Westpac economist Matthew Hassan said a clear pattern of moderation across all measures had emerged over the past six months. "There are clearer and clearer signs that price momentum has softened quite significantly over the first half of this year," Mr Hassan said. "The auction clearance rates tell it; the finance approvals tell it; the sentiment is pretty clear as well."
He said the incremental impact of interest rates returning to normal levels had squeezed affordability and slowed demand as the market tilted in favour of buyers.
"It doesn’t necessarily mean we’re rushing headlong into price declines," he said. "I think with rates still around neutral and clearly quite a lot of pent-up demand for housing in many markets, . . . you’ve got a pretty good case for a soft landing."
But RP Data national research director Tim Lawless was less optimistic, pointing out the ABS data had not picked up a deterioration in June.
The RP Data-Rismark home index shows home values fell 0.7 per cent in June. Mr Lawless said that was accompanied by clearance rates of 55 to 60 per cent, down from 70 per cent rates late last year. Housing finance approvals also remained low.
"The next six months is likely to see flat market conditions at best, perhaps further month to month modest declines," he said.
Story by Nicolas Perpitch The Australian