Housing prices in Sydney have risen nearly three times as rapidly than in any other capital over the past year.
And, if anything, the uneven nature of the housing price boom is becoming more extreme.
This time in 2014, according to the CoreLogic RP Data weekly summary of the housing market, the housing market was strong.
Annual growth in prices was a heady 10.1 per cent on average across the mainland state capitals.
The latest figures, taking us up to the week ending Sunday, show the annual growth rate has slowed to 7.5 per cent – still strong, but only three quarters of the pace measured a year earlier.
All the capitals measured in the weekly data recorded slower rises annually.
Even Sydney’s annual growth rate is slower than a year ago but, although down from last year’s 14.9 per cent, at 14.3 per cent it’s still a breakneck pace.
The same pattern of slower growth applies for the most recent few months too, from mid-December to now.
That is, it applies everywhere except Sydney, where prices are up by 5.1 per cent since mid-December, compared with a 3.5 per cent rise over the same part of 2013/14.
The other capitals recorded either slower rises, steeper falls, or a switch from rises to falls this summer compared with last.
This pattern was noted last week by the Reserve Bank of Australia in the minutes of its board’s latest monetary policy meeting held earlier in March.
“Housing price growth remained strongest in Sydney and to a lesser extent Melbourne, while price rises in other parts of the country had been more modest and prices had even declined in some cities recently,” the RBA said in the minutes.
The RBA also said the market risks to lenders would be “tempered” by the measures applied by regulators in December.
However those risks had to be seen in the context of “the prevailing low levels of household stress”.
Reading between the lines, the RBA appears to believe the regulators have the potential housing bubble problem covered.
That in turn – when combined with the absence of any real sign the economy is gaining momentum – suggest the housing market could get another shot in the arm in the form of an interest rate cut in April or, failing that, in May.
That is what most economists expect, and what’s factored into the futures market. If that’s how things turn out, it will be a good test of the resolve of investors to ignore the obvious risks, and an equally good test of the ability of the regulators to manage them.
Some more detail on how the RBA assesses the market is likely to be found in a key report this week – the semi-annual Financial Stability Review, due on Wednesday.
SYDNEY HOUSE PRICES ON FIRE WHILE OTHER CITIES COOL
* Sydney up 14.3pct vs 14.9pct a year ago
* Melbourne up 5.0pct vs 12.2pct
* Brisbane: up 3.0pct vs 4.2pct
* Adelaide: up 1.6pct vs 5.6pct
* Perth: up 0.1pct vs 5.3pct
(Source: CoreLogic RP Data)