New housing data shows the value of Australian properties rose 3.9% during the first five months of 2009, nearly wiping out losses incurred during 2008.
The RP Data-Rismark national home value index shows prices increased in May by 0.9% to a median of $468,819, just $520 below their February 2008 peak.
The data also shows that home values increased in every mainland capital city except for Perth, and that housing prices have increased nationally by 1.6% over the 12 months to May 2009.
The index shows prices rose in Sydney by 5.2% to an average price of $529,785 in the five months ending May 2009, Brisbane rose by 2.6% to $432,101 while Melbourne experienced the highest increase of a massive 6.1% to $443,811.
Adelaide jumped by 0.5% to $396,839, Darwin also increased by 5.5% to $444,846 as Canberra rose by 2.1% to $460,309. Perth experienced a decrease in values by 0.5% to $468,052.
The data shows the most expensive units on average were found in Sydney at $442,994, with the cheapest found in Brisbane at $327,982.
RP Data head of research Tim Lawless says the “really good” news shows the Australian property market is now experiencing a recovery.
“The most significant thing is that up to May we have experienced a recovery in the market, it’s taken 15 months for prices to virtually recover.”
Lawless says the median price remains $500 below their peak in February 2008, but that “for all intents and purposes, this is a recovery”.
“Now when you drill beneath the surface, some markets have performed better than others. Perth for instance, property values have spilled down 4.6% here, but we are seeing the declines there getting smaller so we have seen the worst there.”
Lawless says the recovery has happened sooner than expected, and that it “speaks volumes” about the state of the Australian economy.
“Considering the state of the economy, it is kind of surprising to see prices have recovered, but consider also the under-supply of dwellings in Australia coupled with population growth.”
“I think we will see more increases month to month of the same magnitude coming into September, and after that we’ll see first home buyer demand come back when the Government’s grants drop off. That gap will be filled by investors who will come back and take up some of that falling demand due to lower competition.”
CommSec chief economist Craig James says, “Australia can rightly claim the title of ‘the wonder from down under’”.
“In most developed economies home prices are going backwards, whereas prices are rising in Australia. The solid growth of Australia’s population is a key reason why Australian home prices are rising, not falling.”
“The latest data on home prices confirms our view that interest rates have all but bottomed. There is still the risk that the Reserve Bank will cut rates one more time to counteract increased unemployment. However, for now it remains in wait and see mode.”
Meanwhile, the Housing Industry Association has said new home sales have fallen 5.7% due to weakness in detached housing markets, but sales are still 15% above their low in December.
The data shows detached home sales in NSW fell 10% in May, while sales dropped 8.7% in VIC.
The HIA said in a statement that the declines are based on “negative speculation about the Federal budget”, as several first-home buyers abandoned prospects of buying, believing the Government would end the first home owner’s boost.
”The vast majority of the housing recovery has been at the first-home buyer end of the market. As that segment inevitably slows over the remainder of 2009 it’s vitally important that the much larger trade-up and investor segments return to health,” said HIA Senior Economist Ben Phillips in a statement.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
