SYDNEY - Australian house prices have risen for the 10th straight quarter, led by another outsized gain in Sydney, adding to concerns about an overheating market and diminishing affordability in the city.
Yesterday's data from the Australian Bureau of Statistics showed prices across all the major cities rose 1.6 per cent in the three months to March, lifting annual growth to 6.9 per cent.
The heat was again very much concentrated in Sydney where prices were up by more than 13 per cent year on year, and that was before the Reserve Bank of Australia (RBA) cut interest rates to a new low of 2 per cent last month.
More timely data from the housing industry had hinted at a cooling down over the last month or so, partly due to the onset of winter. Yet the latest survey from property consultant CoreLogic RP Data found a sudden rebound last week.
Average values across the state capitals rose 1 per cent from the previous week, with Sydney alone up 1.6 per cent and Melbourne up 1.4 per cent.
Annual growth in prices picked up to 9.l per cent nationally and a frothy 15 per cent in Sydney. Demand was also strong, with almost 84 per cent of home auctions in Sydney proving successful, and 79 per cent in Melbourne.
Some increase in prices was always necessary to drive a much-needed revival in home building. And it's working, with approvals to build new homes at a record high, providing jobs and supporting economic growth.
But speculative demand has grown so fierce in Sydney that it prompted RBA governor Glenn Stevens to label it "crazy". The central bank fears it could ultimately push prices to peaks that threaten a vicious pullback.
Regulators have tightened their coverage of lending standards for property investment and there are tentative signs that banks are slowing growth in their mortgage books.
Affordability, or rather the lack of it, has become a political hot potato. Treasurer Joe Hockey drew much criticism this month when he advised would-be buyers in Sydney to "get a good job that pays well" as the first step to owning a home.
Lawmakers have launched their own inquiry into affordability, which kicks off with a public hearing on Friday seeking policies to allow all Australians to have a "fair chance" to own a home.