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Melbourne, Sydney and Brisbane property markets climb off bottom

Property markets in Sydney, Melbourne and Brisbane rebounded from their depths and are starting to recover as buyer confidence improves and prices rise, according to analysis by national valuer Herron Todd White (HTW).

But markets in other major mainland centres, including Darwin and Perth, continue to linger at the bottom, despite a pick-up in mining exports expected to flow through to increased demand for property.

The outlook for apartments also remained flat in 15 major centres, including Sydney, Melbourne, Brisbane, Alice Springs and Ipswich. They are stuck at the bottom amid continuing concerns about oversupply and construction issues.

The HTW national property clock uses information from the company’s national network of valuers to assess which markets are rising to the top or falling to the bottom.

Hobart, which has defied the mainland downturn, is approaching the peak for both houses and apartments.

The biggest property markets continue to be buoyed by falling interest rates, special borrowing deals for first-time buyers, higher auction clearance rates and improving buyer sentiment.

Across the nation, house prices increased by more than 1.1 per cent during September, following a 1 per cent gain the previous month, according to government analysis. That's lifted prices by more than 2 per cent from their June trough but they remain down more than 8 per cent from the peak in late 2017.

Biggest gains

Melbourne and Sydney posted the biggest gains, of almost 2 per cent, with Brisbane prices flat and Perth continuing to decline.

HTW said the drop in Sydney rental yields to 10-year lows had encouraged many investors to look at alternatives to the standard house to help improve returns, such as granny flats, or dual key apartments, which provide a one or two-bedroom upstairs and studio downstairs.

In Victoria, the hunt for rising yields is attracting investors to high-density suburbs east of Melbourne, such as Box Hill, Ringwood and Hawthorn, that have good public transport and are close to prestige schools and universities.

Brisbane’s investment market is being boosted by a rental market recovery as the oversupply continues to be absorbed, according to the report.

“Investors are seeking properties around the university nodes and multiple-occupancy style accommodation such as flats, boarding houses, student accommodation or dual occupancy dwellings,” it said.

Canberra at the peak

Canberra’s housing market, which is at the market peak, is being driven by low vacancy rates, strong rental demand, above-average incomes and a transient population of professionals, government workers and parliamentary staffers.

Property sales in Perth continue to languish despite improving yields from the rental market.

Perth house prices during the June quarter fell 2 per cent from the previous quarter.

But average house yields of about 4 per cent around greater Perth are expected to “continue to keep investor’s heads afloat”, the report concluded.

The HTW property clock for houses showed that all of the nation’s state capitals, except Perth, are either recovering, in a rising market, or approaching the peak.

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