Australian housing prices grew by the strongest amount since 2003 during the last 12 months, according to the latest figures from the Australian Property Monitors’ Quarterly Housing report.
But some analysts have criticised the results, saying they are more likely to reflect changes in the types of houses being sold and not necessarily capital growth.
APM economist Matthew Bell said in a statement the property market grew by 4.8% during the December quarter, equating to a 12.1% rise for the year overall.
In Melbourne, the nation’s second largest property market, prices grew by an annual rate of 18.5%, with median prices now past $500,000. In Sydney, the largest market, a rise of 12.1% was recorded on the back of increased activities from investors.
It was this attention from investors which kept property prices rising after the first home owners boost began to be phased out, with activity in that demographic also diminished. Bell said in a statement the strong growth was due to the country’s unexpectedly low unemployment rate.
“Rising interest rates and the full expiry of the first home owner boost at the end of December are likely to continue to slow activity for first home buyers, while the recovery of top end prices to pre-GFC levels means that median price growth is likely to moderate across all sectors of the market in the first half of 2010, with the medium-to-long-term outlook for property prices remaining strong.”
In Brisbane, prices rose by 3% in the quarter and 7.7% for the year to a median of $445,562, while prices in Adelaide grew by 1.5% for the quarter and 2.4% for the year respectively to $427,109.
In Canberra, prices grew by 4.3% quarter-on-quarter and 10.6% for the year to $535,941, while Perth prices grew by 3.1% in the quarter and 8.7% over the year to $512,178. In Hobart, quarterly prices grew by 6.2% and over the year by 14.4% to $321,798, and in Darwin, prices grew by 4.3% and 13.5% to $556,295.
For unit prices, the biggest quarterly growth was recorded in Perth, with a 6.6% increase to $385,001, equating to a 15.8% rise over the year. The largest yearly growth was recorded in Darwin with a 22.8% rise to $428,448, with a quarterly rise of 3%.
Bell also said the top-end sector of the market has performed quite well, with the most expensive 50% of suburbs rising by 17.1% from lows during the March quarter. Specifically, Sylvania Waters in Sydney grew by 58% during 2009, while East Melbourne gained 58.9%.
“The price growth seen in the more expensive suburbs in 2009 has largely been a recovery of the price falls that have occurred since late 2007 and early 2008.”
“This top-end recovery has been completed in most capitals with median house prices surpassing pre-GFC highs for the first time in the December quarter in Sydney, Brisbane,
Adelaide and Perth.”
Bell also said activity is due to slow over the next few months, and recovery of top-end prices will see price growth subdued over the first half of the year. However, “the medium-to-long-term outlook for property prices remains strong, as high population growth, rising incomes and a relative lack of new supply means there will simply be more demand for housing than supply”.
However, APM’s estimates have come under attack. RP Data national research director Tim Lawless said in a statement the results are “unexpectedly high”.
A resurgence of interest in higher priced properties combined with the fall back of first home buyers is likely to have played a role in inflating the latest growth figures.
Rismark chief executive Christopher Joye also remarked the RP-Data-Rismark house price results, which are expected tomorrow, will give a more conservative picture of the market.
“The median price indices produced by other companies are being adversely impacted by changes in the composition of buyers in the market. RP Data-Rismark’s “hedonic” index is not affected by these changes. In the first quarter of 2009, the median price index providers got it very wrong, claiming that house prices were falling when in fact they were rising rapidly.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
