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IN PHOTO: A man waits at a bus stop next to a sign advertising bank interest rates for home loans in Sydney October 7, 2014. Frothiness in Australia's property market has triggered central bank warnings of regulatory steps to rein in loans to investors, but the nation's banks are turning a deaf ear, sceptical that any such action is needed or imminent. Lending to investors has jumped this year to its highestsince comparable records started in 1991, accounting for about half of Australia's residential loans in value terms. Investor interest has also helped pushed housing prices in Sydney and Melbourne to the point where most first-time home buyers are widely seen as priced out of the market. Picture taken October 7, 2014. REUTERS/David Gray

The home prices in Melbourne has crossed Sydney in the last quarter as the second largest capital of Australia recorded a 4.9 percent growth in the month of July. The CoreLogic RP Data Home Value Index for the month of July has shown that the dramatic growth in the prices over the month has brought it up to 6.1 percent for the three months until July 31.

The continued surge in the home prices has catapulted Melbourne ahead of Sydney, not only in the last month but also in the last quarter. But despite the strong growth recorded in Melbourne, the value of real estates in Sydney still leads the chart with a growth of 18.4 percent compared to 11.5 percent in Melbourne.

According to Tim Lawless, research director of Corelogic, the real estate market of the two biggest cities of Australia is dominated by investors from Sydney who make up 60 percent in the total count. He also of the opinion that the recent moves taken by the banks to bring down the sky high prices of the houses in Australia, in the form of high investor interest rates and strict lending standards, will definitely affect these figures.

"The net effect will be a fall-off in demand because investors are such a large part of the marketplace now, they're more than 50 per cent of the market, they're more than 60 per cent in New South Wales," he said. "So I think if we do see some improvement in owner-occupier numbers, it will probably be less than what we see as a slowdown in investor numbers."

According to the ABC news, however, the property market for the rest of the cities is not as bright as it is in Melbourne and Sydney. Brisbane, Adelaide, Canberra and Hobart recorded a pretty mediocre growth whereas Perth experienced a considerable drop, with Darwin edging a steep fall by 5.3 percent.

The Financial Review reported Lawless say that the investors in Melbourne and Sydney are the most active, indicating that the low yield profile has not acted as a deterrent in these markets. He also said that Hobart is the only place where the yield has not deteriorated and the rental growth has been in compliance with the value growth.

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