Home values rose to a record high last month led by strong growth in Sydney and Melbourne, according to new housing data.
Figures released today by RP Data Rismark show capital city values peaked during September above the previous high set during the 2010 property boom.
A housing bubble may be on the horizon.
The spike in values is likely to prompt further concern Australia’s housing market may be heading towards a property bubble as historic low interest rates prompt borrowers, particularly investors, to surge back into the market.
RP Data research director Tim Lawless described the growth as a ‘‘technical’’ recovery in the housing market.
By the end of September, capital city values were 0.7 per cent higher than their previous record high set in October 2010, Mr Lawless said.
Sydney’s home values rose 2.5 per cent during the month and were up 5.2 per cent over the September quarter.
Melbourne’s values also rose substantially, 2.4 per cent, up by 5.0 per cent over the quarter.
‘‘We haven't seen market conditions this strong since April 2009 for Sydney and May 2010 for Melbourne,” Mr Lawless said.
Perth, which has previously seen strong capital growth because of the mining boom, has come off the boil with values rising just 1.3 per cent over the September quarter.
Brisbane’s housing market remains sluggish. Values rose just 1.1 per cent over the past year, RP Data’s figures show.
Canberra’s home values fell during September by 0.7 per cent, Hobart’s were also down 2 per cent and Darwin’s dropped 2.5 per cent. Adelaide’s rose 1.1 per cent during the month.
“Any debate about unsustainable growth in housing markets should be very much focussed on Sydney and Melbourne,’’ Mr Lawless said.
Investors were returning to the housing market in greater numbers, attracted by interest rates at historic lows, Westpac economist Andrew Hanlan said.
‘‘Investor credit increased by 7.1 per cent annualised over the past three months, accelerating from 5.1 per cent at the end of 2012,’’ Mr Hanlan said.
New lending was trending higher but many existing mortgage holders were taking advantage of lower rates to accelerate repayments, he said.