Sydney home prices surged 3.6 per cent in March, the fastest monthly rise in 33 years, as buyers raced to take advantage of low interest rates and government incentives.
The last time Sydney hit more than 3 per cent monthly growth was in August 1988, when prices surged 3.8 per cent, CoreLogic says. Since Sydney prices hit their bottom last September, they have risen 8 per cent.
The CoreLogic March Index set to be released on Thursday is also likely to show dwelling prices in Melbourne jumping 2.2 per cent, Brisbane 2.4 per cent, Adelaide 1.4 per cent and Perth 1.7 per cent.
The five capital city aggregate is likely to rise 2.8 per cent. This would be the strongest growth since October 1988, when the combined capital cities rose 3.5 per cent for the month.
Melbourne prices hit their low in October and have bounced back 6.8 per cent since.
The rapid price growth is causing concern even among industry players.
“I think the [Sydney] market is getting too hot too quickly,” said Douglas Driscoll, chief executive of real estate group Starr Partners.
“The rapid rate of growth at the moment is scary. When you see some of the prices that are being achieved at auctions, they are mind-boggling. It makes no sense. Personally, I don’t believe this growth will be sustainable.”
Mr Driscoll said the current price boom lacked solid grounding as uncertainties surrounding the pandemic persist.
“I don’t think we’re working off a stable base at the moment, because we’re still in uncertain economic times, we’re still in the middle of a pandemic, so the dust hasn’t settled yet,” he said.
“When you have a property market that is going gangbusters, you have to look at it and ask what the immediate future looks like: are people’s jobs safe and can they really service the loan?”
Robert Mellor, executive chairman of BIS Oxford Economics, said Sydney and Melbourne are likely to run out of steam quicker than the smaller capitals.
“They’re likely to run out of puff probably by the end of the year, as these markets have already grown rapidly during the last boom,” he said.
“But the smaller capitals like Brisbane, Perth and Adelaide could continue seeing stronger growth, because they have been depressed for so long.”
Source: Financial Review