Australia's new 'two-speed economy' sees property prices diverge
Reserve Bank keeps benchmark interest rate at a record low, as prices surge along Australia's east coast and decline in remainder of the nation
Australia's property market is showing signs of a new two-speed economy.
The housing market has been pumped up by the Reserve Bank of Australia keeping its benchmark interest rate at a record-low 2.5 per cent for 15 months, with home loans to property investors in September growing at the fastest since 2008.
Demand for higher-risk mortgages, including interest-only loans, have prompted regulators to review tools to cool lending and avoid a jump in loan delinquencies.
The data "highlights the issues facing policymakers in attempting to cool a very diverse housing market," said Savanth Sebastian, an economist at a unit of Commonwealth Bank of Australia. "It would be more encouraging if price gains across the nation were more uniform."
Monday's report showed prices jumped 1.3 per cent in Sydney in October and were up 13.1 per cent from a year ago. Prices rose 1.9 per cent in Melbourne and 0.6 per cent in Brisbane.