SYDNEY • Australia's property frenzy is back in full swing, with home prices surging the most in 16 years last month.
National property values jumped 1.7 per cent, the largest gain since 2003, according to data from CoreLogic released yesterday.
Sydney and Melbourne continued to lead the rebound, with prices up 2.7 per cent and 2.2 per cent respectively. Annualised gains over the past three months in both cities are tracking in the mid-20 per cent range, CoreLogic said.
At that rate, home values will recoup all their losses from the recent downturn and be back at record highs early next year.
"The Australian housing market is now five months into an unexpected period of rapid recovery," CoreLogic research director Tim Lawless said in a statement. "The question is, how long can such a high pace of capital gains be sustained?"
The housing rebound is a complete about-face from just six months ago, when economists were debating how much further prices could fall.
In addition to record-low interest rates and a loosening of lending curbs, prices are being driven higher by a shortage of properties on the market. That has led to a renewed fear among buyers that if they do not jump in now, they could miss the chance to buy.
"With selling conditions looking very strong, there is a high probability that listing numbers will show a material lift through the first quarter of 2020, which will test the depth of the market and likely ease some of the urgency that is contributing to higher prices," Mr Lawless said.
While the biggest gains are centred on the nation's two largest cities, the recovery is starting to spread.
Home prices edged 0.4 per cent higher in Perth, which has been in a five-year swoon after the mining boom ended.
Economists have begun to upgrade their outlooks, with HSBC Holdings recently doubling its forecast for nationwide house-price growth.