Melbourne price rebound of more concern than Sydney's catchup as ANZ dominates home loan growth

Melbourne is now seriously challenging Sydney's price surge which ought be of mild concern to the Reserve Bank of Australia board.

The latest price growth detail suggest there was a 2.45% spike in Melbourne's dwelling values during September and a 5% gain over the September quarter.

That rate of acceleration is just a tad below the Sydney figures of 2.5% September montly growth and 5.25% quarterly growth, according to RP Data.

Annualised its 5.4% growth in Melbourne against 8% in Sydney.

Sydney's so-called recent bubble gains come against the backdrop of a decade of ordinary price growth, infact the weakest capital city at just 2.5% annual growth.

But Melbourne's growth is not catchup, as it had 5.5% annual growth over the past decade.

The RBA governor's October statement noted the pace of borrowing had "remained relatively subdued," though "recently there have been signs of increased demand for finance by households."

Not all of the big four banks are making the most of the current opportunities after the RBA lowered interest rates to a fresh record low 2.5% in August, adding to the earlier seven cash rate cuts in the current cycle.

Interestingly it was the ANZ - with its Melbourne headquarters - which has expanded its mortgage book at the quickest pace of the big four banks, according to the latest data from the Australian Prudential Regulation Authority.

It showed ANZ's home loan book grew by 7.1% on an annualised basis during August.

ANZ sits as the smallest home lender amid the big four, but has its standard variable mortgage rate at 5.88% which equals NAB as the lowest advertised rate among the big banks.

ANZ's 7.1% home loan book growth compared with the 5% for the Commonwealth Bank and NAB. There was 2.7% annualised growth for Westpac which has been losing home loan market share given its highest standard variable rate among the big four.

Tim lawless says maintaining the price growth currently seen in the two major capital cities was "unlikely."

And he added the current rate was starting to erode yield for investors.

Prices in Brisbane are still 10% off the 2009 peak offering the second-highest yields in the country.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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