While Sydney and
 Melbourne will continue to record strong growth in housing prices over the next 12 months most 
other markets in Australia will register little or no price movement, says a leading property economist.

Harley Dale, chief economist at the Housing Industry Association, said national house price growth will slow down over the next 12 months even if some pockets in capital cities post another bumper return for the period.

Although the Reserve Bank lowered interest rates to an historic low in May, Mr Dale believes that increased unemployment and stagnant household incomes
 will outweigh cheaper home loans and investor appetite.

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Mr Dale said prices across the combined eight capital cities rose by 7.9 per cent in the 
three months to April this year when compared to the same period in 2014, but price growth for regional Australia was much “softer” at 2.9 per cent.

“There are literally thousands of property markets around Australia,” Mr Dale said.

“Many will grow 
in inflation-adjusted terms over the next 12 months and many won’t. In aggregate, Sydney looks to be
 well out in front, Melbourne is kind of in the race, Brisbane is accelerating from effectively last place,
 and the rest have some training to do. National housing price boom – rubbish!”

The economist said while Sydney housing enjoyed “a standout” year in 2014 (rising 14.5 per cent in the
 three months to April this year compared with the same period last year), followed by Melbourne (6.9 per cent),
 “nowhere else stood out”.

And by that he means some cities were lucky to break even for the year:

• Brisbane: +2.2 per cent
• Adelaide: +1.7 per cent
• Perth: +0.3 per cent
• Hobart: +1.2%
• Darwin: -1.6%
• Canberra: +1.1 per cent
(Source: CoreLogic RP Data Home Value Index – May 1)

High unemployment rates will stunt housing boom

Mr Dale said unemployment and steady household incomes mean the Sydney market will eventually slow.

“Sydney is out there on its own, so it’s hard to predict when prices will slow, but there won’t be a crash,” Mr Dale explained.

“Everybody will remain in a tizzy about Sydney through the rest of the year. Watch Sydney because price growth is very strong. The authorities will act on that, though, 
which is another factor pointing to the unlikelihood of any acceleration in national property prices in the
 year ahead.”

Patchy auction results

Mr Dale’s views are supported by by recent auction clearance data.

The Real Estate Institute of Victoria showed 76 per cent of houses over the weekend were sold, while 84 per cent of homes for sale in NSW sold over the weekend.

But other states do not show such robust auction activity. According to Australian Property Monitors, just 46 per cent homes up for auction sold while in Adelaide 79 per cent of homes sold, a major rebound from 57 per cent the weekend before.

For the moment, Mr Dale said “super low interest rates” are driving further demand for housing in 2015.
 And he said “this general state for property price growth won’t change in a hurry”.

“Borrowing costs will remain very low and domestic investor appetite
 will hang around as a key driver,” he said.

“Household income growth will remain well below average
 and unemployment will stay above six per cent. They are the two (big) negative influences on housing
 demand. So, price acceleration is unlikely and headlines of a ‘national housing price boom’ will remain
 erroneous and, at times, almost irresponsible, because there are negatives as well as positives.

“Sydney is an ‘out there’ market which is outperforming now following a decade of underperformance.
 Melbourne price growth still looks relatively strong, but is easing as the force of an overall weak 
economic environment – reflected in income growth – rears its head.”

This story was brought to you by The New Daily using data and other information from its real estate content partner, realestateVIEW.com.au. To download the new free realestateVIEW.com.au app click here!