The bellwether suburbs leading a new round of property price gains

Areas where home values have bounced probably have more demand from buyers and fewer owners looking to sell, she said.

“[We’re] generally seeing that little bit of increase in demand, also at a time when potentially there’s going to be less property going up for sale,” she said.

“As interest rates fall, there’s less impetus for people who maybe were borderline of mortgage distress, they won’t be as likely to list their property, especially if values are rising.”

She thought that a mix of improved sentiment and increased borrowing capacity had caused the price swings.

“Those upper quartile properties do require more funds to get in. It does require a larger chunk of capital to enter that market and as rates are higher that requires a higher holding cost,” she said.

“Sentiment equally is also going to be a factor playing into it. When rates start to fall people start to have that little bit of extra money … they feel a little bit wealthier.”

Ezzy said the outlook for the property market would depend on interest rates. There were early signs of a slower flow of new listings in Melbourne, which could put upward pressure on values, but housing affordability continues to be a challenge, she said.

Westpac senior economist Matthew Hassan agreed that areas such as the eastern suburbs have been a bellwether for Sydney, leading other areas in price moves.

He thought the overall price gains last month may be slightly affected by seasonal factors such as the reopening of the auction market in February for the new year, but thought it was a genuine bounce.

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“There is a little bit of an improvement in borrowing capacity as happens when rates move. It might get bid away quite quickly if prices rise,” he said.

“There’s a wider expectation though that interest rate cuts don’t often come in ones, they come in twos and threes.”

But the outlook would depend on the path of interest rates, he said, and would vary by location. In Brisbane and Perth, for example, where prices have been rising, growth slowed last month.

“Maybe it’s better to describe at this stage the Sydney and Melbourne markets as stabilising but beyond that you would think this is quite a constrained upturn for the market,” Hassan said. “The starting point for affordability is pretty stretched, the extent of the interest rate [easing] coming through is not expected to be large and we do have some slowing in previously very hot markets.”

Mortgage broker Chris Foster-Ramsay has been fielding calls from some clients hoping to borrow more and asking if there will be further cuts.

Some families have been able to increase their budget by $50,000 or as much as $100,000, the Foster Ramsay Finance principal broker said.

A handful tried to buy a home fast, anticipating rate cuts pushing up property prices. Some were successful and some were not, he said.

“Once everyone came back mid-January, I started to see a bit of a swing, and as the chatter among media outlets and the like became more prevalent that spurred people into action,” he said.