Melb, Syd house prices kick up



Sydney and Melbourne are set to reclaim some of the losses recorded over the final quarter of 2015, with CoreLogic’s daily index for Sydney bouncing half a percent higher over the first 27 days of January while dwelling values in Melbourne are likely to increase by approximately 2% by months end.

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The month to date performance will help to offset the 2.3 per cent fall in Sydney values recorded over the December quarter, while the higher growth rate in Melbourne should bring Australia’s second largest city back into positive growth territory on a rolling quarterly basis.

The remaining major capitals are continuing to show relatively sedate housing market conditions with the potential for further falls when the end of month index results are published next Monday.

Despite the higher index readings across the largest cites, it’s likely that housing market conditions will track lower than what we saw over 2015.

The news means that what some call Australia’s so housing bubble will continue. While the issue of whether or not a bubble is about to burst is an open question, high price levels do to the lives of the families and individuals who have to live in such expensive houses.

As a recent report notes, “securing a standard of living for younger people that at least equals that of their parents and facilitates upward mobility for all must be a principal policy priority”.

When economists argue about the causes of spiralling house prices, one will point to lower than necessary interest rates, another to the influx of foreign money, another to artificial constraints on land releases, and another still to the tax treatment of primary residences and investment properties.

But whichever you think is the most important factor, the results are the same – severely unaffordable homes that are putting too many young Australians under financial stress.

If the Demographia survey is an over-simplification as its critics claim, perhaps we need a few more such over-simplifications to get a simple message through to Canberra – Australian homes are not primarily there to make speculators rich, or to store the wealth of foreigners, or to help cunning investors avoid paying tax.

They are supposed to be there to live in.

– with Rob Burgess

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