Australian house prices soar to record high
03-03-2014
News : Australian house prices have reached a record high, following ‘jet propelled’ rises in values and buyer demand.
June’s RP Data-Rismark Home Value Index says capital city home values in Sydney, Melbourne, Brisbane and the Gold Coast, Adelaide and Perth have risen 3.8% over the last year.
And Australian Property Monitors (APM) data says national house prices have risen 2.8% in the three months to June, the best result since March 2010 and the third consecutive quarterly rise.
The average national house price has reached a record $564,325 and buyer activity in most capitals is nearing record levels, says APM.
Sydney, Perth and Canberra recorded the highest ever median house prices over the June quarter with Melbourne nearing its previous price peak. Sydney median house prices rose 2.7% to $690,064 with unit prices also rising strongly by 2.4% to $491,845 – both all-time highs.
Melbourne recorded the strongest result of all the capitals over the June quarter with houses up 5% and units up 3.7%.
APM’s Senior Economist Dr Andrew Wilson says, “Jet-propelled by the lowest interest rates in decades, rising confidence and continued generally solid economic performances, buyer activity in most capital city housing markets is now charging towards record levels with the fastest prices growth since the government-stimulated house price boom of 2009 and 2010.”
The Brisbane market continues to consistently record quarterly house price, but a fall in the median unit price of 2.4% suggests there is an oversupply of new inner city apartments.
Perth house prices are up 3.2% and units up 2.5% over the quarter and 7.5% over the year, with units rising 9.3% annually, the best performance by all the capitals. High levels of immigration and a still strong local economy is behind the rises.
The Canberra housing market has revived over recent months with house prices up a solid 1.8% over the quarter and 4.2% for the year to June.
The Adelaide market is finally showing some consistent increases with house prices up 0.8% and units up 1.2% over the quarter.
Although there was no growth in Hobart in the June quarter, house prices have risen by 2.4% over the first half of 2013.
Darwin is the exception, where seasonal price fluctuations saw values down 2.1% over the June quarter, although they are up 5.7% on June 2012.
And the good news looks set to continue, says Dr Wilson. “The patchiness that has characterised market activity over the past year is diminishing as expected with most capital city markets and market segments at or near record levels and rising. Increased investor activity is a key ingredient of the current prices growth in most markets.
“The usually quieter winter market is set to be one of the hottest on record and unlike 2009 and 2010 buyer activity and prices growth will be generated by underlying local drivers and not by massive government stimulus packages.”
But Cameron Kusher, from RP Data, says that over the next year results may vary according to local factors, with Sydney among the top performers. “As I see it, the performances of individual capital city housing markets are likely to continue to diverge based on their own unique circumstances.
“We also know that activity is being driven by investors (who can be fickle and exit the market quickly) and upgraders whose activity is most likely linked to the recent pick-up in consumer sentiment and in some instances the recent pick-up may not continue based on the direction of the economy from here.
“I suspect Sydney will continue to be one of the standout performers and will continue to see values grow, this is largely due to the fact that value growth has failed to beat inflation over the past decade and dwelling construction remains insufficient.
“Melbourne continues to surprise however, it has not had a significant period of value correction as what has been seen across other major capital cities such as Sydney, Brisbane and Melbourne. We also know that housing supply is much more sufficient across the city than it is across most other major capital cities. Although values are currently rising on the back of low mortgage rates I do question the sustainability of the current rises, particularly once mortgage rates start to rise again.”
Brisbane, where prices fell over a long period, is due to see values rise and there are likely to be modest gains in Adelaide and Perth, where the rate of rises has been slowing, Mr Kusher predicts.
Hobart, the only capital city housing market that has recorded a fall in values over the past year, still has little economic or population growth and is difficult to see how the housing market can start to recover at the moment. The Darwin market could also struggle.
In Canberra, home values have not seen the previous big price falls that other capitals suffered. Over the past year, prices rose 1.1% but there are signs of a slow-down and with a looming election and possible cuts to public services, demand and values could suffer.