This article is from the Australian Property Journal archive
RISING interest rates has gently put the brakes on house price growth nationally. However in Melbourne, prices have risen by 27% over 12 months – the highest annual growth since 1995, according to Australian Property Monitors.
APM’s economist Matthew Bell said national median house prices growth slowed as five interest rate rises and the expiry of the First Home Owner Boost began to impact prices – rising a modest 3.1% in the March quarter to $542,827.
In the three months to March, all capital cities except Adelaide and Darwin saw the rate of growth of the median house price fall in March 2010 compared to December 2009.
Over the 12 months period, national median house prices showed a significant annual rate of growth of 16.2% driven by Australia’s strongest property markets in Melbourne and Sydney.
Sydney’s median house price is 14.7% above a year ago at $609,353, the highest level of annual growth since the end of the last boom in early 2004. Melbourne prices increased by a massive 27% over the last year to $549,980 – the highest recorded growth since 1995 – and units by 14%.
Brisbane’s market was flat after three consecutive quarters of growth. Prices fell -0.1% in the March quarter, the only capital city with quarterly growth under 1%. Unit prices also fell -2.2%. In Perth, prices were slighter higher +1.1% in the quarter, down from +3.1% in December quarter. Annual growth was 9.4% which was well under national average of 16.2%.
Canberra median prices for houses and units rise by over 13% during the year to March 2010. Although there was slight pause in unit price growth, Canberra recorded the second highest annual growth rate in the country. In Hobart, median house prices increased by 3.4% for the March quarter and 14.2% for the year and Darwin median house prices rose by 4.9% in the quarter, largely matching the December quarter rate of growth of 4.3%.
Adelaide was the only major capital to increase quarterly rate of growth in house prices from December quarter by 3.6%, up from +1.5% in December.
Meanwhile Bell said price growth for houses in the most expensive half of the market was nearly double that of the more affordable sector.
“The strong performance has been driven by the more expensive end of the market, being less sensitive to interest rate rises and the removal of first homebuyer stimulus.
“This top-end price growth has now moved well beyond a recovery of the price falls that occurred in late 2007 and throughout 2008 and is breaking new ground for most regions,” he added.
Bell said whilst growth in many markets around Australia remains positive but he warns that rising interest rates and falling housing finance figures will have a greater impact as the year progresses.
“Despite this quarter’s incredible levels of growth in the bigger markets, housing finance has fallen, and historically, price growth tends to follow this after six to nine months.
“This means that if past trends hold, house price rises should moderate further in the coming quarters,” he continued.
“However, we predict that the medium-to-long-term outlook for property prices remains strong, as demand continues to outstrip supply. After some slowing of price growth over the forthcoming months, we still expect the 2010 annual rate of national house price growth to settle in the eight to 10% range,” Bell concluded.
Australian Property Journal
