House prices rose by 3.3% across the country in the June quarter, in the strongest quarterly growth in house and unit prices since December 2007, according to Australian Property Monitors.
The recovery was led by the top-end of the market, with median prices in the more expensive half of the market in Sydney, Melbourne and Brisbane growing by nearly double the rate of those in the bottom 50%.
The results indicate the property market is now in recovery mode with prices having reached their bottom, according to APM.
The two largest property markets, Melbourne and Sydney, recorded price increases while Brisbane and Perth were the only markets to see prices fall back to June 2008 levels.
In Melbourne, the median house price increased by 5.8% during the quarter, with prices up by 4.1% for the 12 months ending in June. Median unit prices rose by 2.8% to $345,000 during the quarter.
In Sydney, the nation’s largest property market, house prices grew by 3.7% in the June quarter, the first quarter of median price growth for the city since December 2007. Unit prices rose by 2.6%.
But it was Darwin which experienced the strongest results, with housing prices growing by 11.2% in the quarter contributing to a 12-month increase of 17.3%. Unit prices dropped by 1.4% to $375,000 during the quarter, but annual growth still remains at over 20%.
Hobart was another strong market, with prices rising 7% in the first quarter of positive growth since December 2007. Unit prices rose by 3.3%.
Canberra house prices rose by 2.4%, with unit prices rising by 2.2%, while Adelaide recorded a 2% rise in housing prices and a 3% gain in unit prices.
Brisbane prices rose by 1.7% in the June quarter, but prices still remain down 4.5% for the 12 months ending in June. Perth housing prices recorded a 0.8% decline in the quarter, contributing to an annual fall of 4.4%, but unit prices managed to increase by 0.6% in a second consecutive quarter of growth.
Australian Property Monitors economist Matthew Bell says the figures are a “very good” result, and that the recovery has been led by top-end housing instead of first home owners.
“This result is really underpinned by the top-end of the market in the big capitals. It is the first broad based recovery that we’ve seen in the last nine months. Could this be the start of a bubble? I don’t think so, as I really don’t see the strength of this quarter being repeated going forward.”
Bell says the problems the top-end of the market has been facing are starting to disappear, which should lead to the entire market seeing a recovery instead of just lower-end housing propped up by first home buyers.
“The factors that have hit the top-end of the market, being early unemployment losses in the banking and financial sectors, etc, have started to stablise. As employment starts to improve and job security improves in these areas, it gives more people confidence in buying properties.”
“In any case, I don’t think unemployment will have a big affect on housing prices. It didn’t when unemployment reached 11% in the last recession, so I don’t think it’ll happen now.”
While the pricing results won’t last for long and are unsustainable in the short-term, he says, the latest results still demonstrate that the property market’s low point has well and truly been and gone.
“I think there are only so many quarters where you can have high rises in top-end properties. There may be another quarter like it next time, but it’s still a soft economy. Overall, however, I think we’ve seen the bottom of prices in nearly all capital cities, and I’d be surprised to see any more significant falls.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
