National property values jumped 1.7% last month, the largest gain since 2003, according to data from CoreLogic Inc. released Monday. Sydney and Melbourne continued to lead the rebound, with prices up 2.7% and 2.2% respectively.
Annualized gains over the past three months in both cities are tracking in the mid-20% 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?”
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’s led to a renewed fear among buyers that if they don’t 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,” Lawless said.
While the biggest gains are centered in the nation’s two largest cities, the recovery is starting to spread. Home prices edged 0.4% 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.