The Royal Bank of Australia recently warned that the Australian real estate market is about to ‘explode’ as residential property prices continue to surge.

The latest price index from RP Data showed that house prices increased by +1.9% in August, the largest monthly movement since the group’s indices began in January 2005.
Melbourne and Sydney recorded the biggest jumps in August, up +2.67% and +2.09% respectively. Australia’s two biggest capital cities have also outpaced the rest of the nation this year, with Melbourne prices rising +11.6% and Sydney up +8.67% in the first eight months of 2009. Overall, Australian house prices are up +7.9% in the same period.

Darwin was the only capital city to record negative growth in August, with prices falling -0.8%.

Tony Richards, RBA economist, said in a statement: ‘It is looking increasingly clear that Australia has avoided the large falls in housing prices seen in some other countries over the past two years or so. But looking forward, the risk is that we might move towards undesirable strong growth in housing prices.’