Residential property prices rose 2.4 per cent in the September quarter 2019 according to official figures released on Tuesday, the strongest quarterly growth since 2016.
After almost two years of tumbling prices of between 10 and 15 per cent in Sydney and Melbourne, the housing market has turned a corner thanks to the help of three cash rates cuts—now sitting at a record low of 0.75 per cent.
In tandem the Australian Prudential Regulation Authority loosened lending restrictions that had required banks to assess all borrowers against their capacity to repay the loan at 7 per cent.
The market has reacted strongly with values just 3.7 per cent lower than they were just 12 months ago across capitals and competition noticeably increasing among home buyers across the country.
House prices in the country's two biggest cities continued to experience a sharp uptrend over the September quarter with many dormant buyers taking advantage of lower prices.
Sydney and Melbourne residential property prices recorded strong growth in the September quarter 2019 with both cities seeing a 3.6 per cent increase.
Hobart saw an increase of 1.3 per cent with Brisbane values lifting 0.7 per cent. Meanwhile, Perth and Adelaide both saw declines.
The positive outlook has been reinforced by the weekend's auction clearance rates in Sydney of 79 per cent, a 47 per cent rise on the same time last year.
In Melbourne clearance rates hit 74 per cent, up 45 per cent on the previous corresponding period.
Moving forward, Moody's Analytics expects Sydney house prices to jump 7.7 per cent next year and a further 7.6 per cent by 2021.
Melbourne is tipped to rack up 7 per cent growth next year and another 7.8 per cent in 2021.
Strong population growth, a shortage of supply, and a kick back in home prices could also reignite the construction downturn which contracted for a 15th consecutive month in November.
According to the Commonwealth Bank of Australia, the continued decline in housing construction—with falling approvals pointing to further declines in activity ahead—will cause an undersupply of housing from late-2020.