Australian property values continued to climb, growing by 1.4% during October to a national average of $496,398, according to the latest RP Data-Rismark Index.
The figures also reveal Australia home values have grown by 10% over the first 10 months of the year, following a 3.8% decline during 2008.
Property prices are now highest in Sydney at $553,583, up from $549,031, followed by Canberra at $503,666 with Perth prices in third at $498,541. Melbourne prices grew to $481,247, Brisbane to $450,386, Adelaide to $413,152 and Darwin at $472,608.
The figures also show the value of detached homes grew by 1.5%, with units only growing by 1.1%.
Over the year to date, Melbourne has come out on top as the best performing capital city with gains of 14.9%, with Sydney, the nation’s largest property market, at 9.9%. Darwin values also increased by 12.7%, Canberra by 11%, Brisbane by 6.9%, Perth at 6.1% and Adelaide by 4.6%.
The data also shows a recovery in the top-end of the market, with the most expensive 20% of suburbs recording 11.9% growth in the year to October, with the least expensive 20% recording just 8.5% growth.
But despite the strong figures, RP Data research analyst Cameron Kusher said the next 12 to 18 months will see growth rates slow due to rising interest rates.
“As interest rates rise over the next 12 to 18 months more normal rates of growth are likely. The removal of the first home buyers grant boost and higher loan costs are will also result in greater pressure on the rental market,” he said.
The figures also reveal strong growth over the first 10 months of the year, with Melbourne coming in front with a massive 14.9% rise in values. Darwin values have increased by 12.7%, with Canberra recording an 11% rise. The weakest growth was in Adelaide, which recorded just 4.6% growth.
Rismark international managing director Christopher Joye said in a statement the figures reveal a resilient market, especially after the marginal 0.4% growth recorded in September, and said he was surprised by the strong market conditions.
He also attacked the notion Australia’s homes are over-valued, saying houses are affordable if bought outside of the major metropolitan areas.
“According to our analysis of all home sales in Australia, which we have privately shared with the RBA, the median Australian home value is only four times average disposable household incomes. This is inconsistent with claims that Australian dwelling prices are six to eight times household incomes. People forget that 40% of the housing stock is not located in the capital cities.”
“This data implies that Australian housing is not expensive by overseas standards, and also helps explain our internationally high rates of home ownership combined with very low mortgage default rates.”
Meanwhile, the number of new home sales has fallen for a second consecutive month, with higher interest rates and a scaling back of the first home owner’s grant to blame, the Housing Industry Association has said.
The HIA’s new figures show new home sales dropped by 6% in October, with the expected activity from investors and upgrade owner-occupiers failing to prop up the gap left by first home owners.
“A decent and sustainable new home building recovery needs strong momentum from private sector trade-up buyers and investors and we seem to be falling short on that score as we near the end of 2009,” chief economist Harley Dale said in a statement.
“Indeed, given the narrowly based private sector recovery, costly delays in planning approvals, and reports of land shortages beginning to re-emerge, it is looking like 2010 will be a year where the number of new homes built will fall well short of what is required to match Australia’s rapidly growing population. The majority of the increase in housing starts next year will be driven by the social housing program which is not pulling the private sector along with it.”
Sales of detached houses fell by 6.9%, after a fall of 4.3% in September. Apartment sales actually grew by 2.4%, but the volume has remained low. Detached new home sales fell the most in NSW by 12.1%, with a 7.2% fall also recorded in SA. Sales fell in VIC by 4.2%, 9.1% in QLD and 3.4% in WA.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
