Capital City Real Estate Values Reach Record Highs

The value of housing across Australia's capital cities climbed to record highs in September, new figures have shown, with Sydney and Melbourne leading the pack.

RP Data and Rismark International revealed the combined capital cities index jumped 1.6 per cent over the month, 0.7 per cent higher than the previous record, which was set in October 2010.

Tim Lawless, research director and analyst at RP Data, said the Victoria and NSW capitals were largely behind the improved market performance last month.

"Sydney home values were 2.5 per cent higher over the month and are up 5.2 per cent over the September quarter, while Melbourne values have seen a similar 2.4 per cent month-on-month gain and a five per cent quarterly lift," he explained.

"We haven't seen market conditions this strong since April 2009 for Sydney and May 2010 for Melbourne."

However, dwelling values were more subdued elsewhere, with only Adelaide scoring positive growth at 1.1 per cent during the month.

Brisbane (-0.3 per cent), Perth (-0.1 per cent), Darwin (-2.5 per cent), Canberra (-0.7 per cent) and Hobart (-2 per cent) all recorded losses in September.

Mr Lawless claimed the figures will be scrutinised closely by lawmakers, with talks over unsustainable growth focusing on the Sydney and Melbourne markets.

"Most other capital city housing markets are in fact showing only a modest growth trend," he commented.

The analyst said Perth's real estate sector had previously been a standout performer, but it only experienced growth of 1.3 per cent over the September quarter.

Brisbane has also remained sluggish, he added, with values only increasing 1.1 per cent during the last year.

Overall, house prices have recovered significantly in the last 12 months, with RP Data and Rismark International noting that capital city values have jumped 8.7 per cent between June 2012 and the end of September 2013.

This followed a 7.4 per cent slump between the market's peak in October 2010 and the May 2012 trough.

It is also important to examine the longer history of capital gains in Australia, Mr Lawless said, rather than just focusing on current statistics.

While the Sydney housing market is thought to be booming, dwelling values have appreciated just 2.5 per cent a year over the last decade.

"Sydney's annual average rate of capital gain over the past ten years is actually the lowest of any capital city," he remarked.