Australia’s national house price increase of 9.8% in the 12 months to December 2013 has been driven by house price growth in the key cities of Sydney, Perth and Melbourne, according to the latest analysis from Fitch Ratings.
Sydney saw price growth of 14.5%, in Perth prices were up 9.9% and Melbourne experienced increased of 8.5%.
The analysis report says that the main drivers of growth is an undersupply of housing and increased borrowing capacity following the policy rate reduction over the past two years.
Local and overseas investors have also driven house price growth, with local investors looking for better returns after bank deposit rates have fallen in line with the official policy rate.
There is also anecdotal evidence that foreign investors have had a role in driving prices higher, however reliable data are not available on this topic. Overseas domiciled investors are restricted to purchasing only newly constructed residential properties.