The value of Australian residential properties fell by 0.3% during December, due in part to lower activity during summer, higher interest rates and the phasing out of the first home owner’s grant, the latest RP Data-Rismark home value index reveals.
But Australian properties have seen values rise by 11.9% over the calendar 2009 year, with Darwin the best performing city recording a 16.6% increase to a median of $455,000.
The results differ from the recent figures given out by Australian Property Monitors, which stated values grew by 4.8% during December and 12.1% over the year.
RP Data head of research Tim Lawless said the property market has performed well over the year due to a stronger economy, and each sector of the market has seen prices improve.
“The strongest gains were recorded early in the year with national home values up 3.1% over the first quarter of ’09. The market was being led by first home buyers and consequently the most affordable end of the market saw a 3.9% lift in values.”
“Over the second and third quarters it was upgraders in the middle and the top ends of the market that generated the strongest gains. The top 20% of Australia’s most expensive postcodes increased in value by 9.5% over the last three quarters of the year compared to 4.1 per cent growth in cheapest 20% of postcodes.”
Over the calendar year, Sydney values grew by 11.4% to $510,000, while Melbourne values also grew by a massive 15.6% to $460,000. Brisbane values jumped 7.3% to $443,000, Adelaide by 6.2% to $365,000, Perth by 7.1% to $470,000 and Canberra by 14.7% to $507,500.
The worst performing city was Adelaide, while Darwin also recorded the highest rental yields of 5.7% for houses and 5.9% for units. Melbourne was the worst performing city for gross rental yields at 3.7% for houses, while Perth only recorded a gross rental yield of 4.4% for units.
The results come as Lawless said the rental market has failed to keep up the pace of the housing market, with rental rates being down about 2.5% over the year.
Additionally, the release also reveals unit values increased by 13.5%, compared to house values which rose by just 10.4%. Lawless said this is a deviation from the norm.
“The recent reversal in fortunes has occurred due to more buyers leaning towards units because they have a more affordable price tag and are often located in more strategic locations in relation to transport and amenity than many detached housing options.”
“Other factors may also include changing housing preferences, particularly among baby boomers, and more highly targeted unit developments being delivered to the market.”
As for the rest of the year, Rismark International managing director Christopher Joye said the market is expected to cool but activity will still remain, despite the suggestion Australian housing is overpriced.
“We are projecting that the housing market will cool as mortgage rates normalise back to 7-8% levels. This implies that capital growth rates will fall back to single digit levels consistent with expected change in the incomes of prospective buyers.”
“It pays to remember that the price of Australian homes is only around 4.1 times disposable household incomes, which has been unchanged since September 2003. This tells us that over the last six years Australian house price have very closely tracked changes in household incomes. Contrary to popular myth, Australia’s house price-to-income ratio is not unusually high, nor has it risen in recent times.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
