The rapid rise of prices for property in Australia throughout 2013 has been driven by growth in the three major cities in particular, the latest report from the country has concluded. Australia has been plagued by fears of an over-heated market and the potential for a bubble after prices rose by as much as 9.8 per cent throughout the last year to the end of December. However, Fitch Ratings said this was a figure in which the average was driven up by the three key cities of Melbourne, Perth and Sydney in particular.
Sydney was the city where the fastest price rises were found countrywide throughout 2013, with these having risen by some 14.5 per cent, while Perth’s prices were rising by as much as 9.9 per cent. Melbourne was the slowest of the three key areas, with prices in this city having risen by 8.5 per cent throughout the year.
Similar to the UK, reports from Fitch Ratings say that the rapid growth in these three regions in particular has been the result of two distinct factors. On one hand is the fact that lending has become more widespread in the past few months following the policy rate reduction over the past two years. Meanwhile, while there have been more people able to get themselves a mortgage, there still remains an undersupply of homes in the nation’s biggest cities, pushing competition and prices higher as a result.
It is thought that in the months ahead, this will be an issue that spreads into other cities as well as they become more heated with demand and undersupply. Fitch believes that the likes of Adelaide and Brisbane are set to see prices rise in a similar fashion in times ahead, following a period of growth far slower than has been witnessed in the three larger cities. At the moment, these have homes that cost 6.5 times income on average, compared to the key three, where final sale values currently sit at 9.9 and 9.1 times in Sydney and Melbourne respectively.