At the end of last year Sydney’s raging house prices were tipped to be running out of steam.
And then the February rate cut. Prices have since found a second wind and auction clearance rates hit a record topping 90 per cent last month.
And now another rate cut.
This housing cycle has been a Sydney story, with values rising 14.5 per cent in the last year and a whopping 40 per cent since the last housing market trough in May 2012, just three years ago.
Melbourne has been next closest at 7 per cent, half Sydney’s annual growth and 24.5 per cent since its 2012 low, according to figures from researcher RP Data CoreLogic.
But the rest of the country has lagged, with Brisbane the strongest at only 2.2 per cent price growth in the last 12 months.
Apart from supercharging the Sydney market yet again, a rate cut might finally bring some confidence to Brisbane and Perth, where the mining downturn and concerns over job security have undermined the resilience of the housing market.
Will it ultimately result in the Sydney bubble bursting? Housing affordability and lower yields for investors should start to take some steam out of the Sydney property market before the Reserve Bank reverses direction and increases the cash rate.
Even if Sydney -- or Melbourne’s -- housing prices take a hit, they are very unlikely to drop 30 or 40 per cent. It’s not time to panic yet.
This article originally appeared in the Australian Business Review.