Tuesday, September 1, 2009

NEWS: House prices up in Australia - is it another boom?


Australian home values have increased across every capital city, rising by 5.9 percent nationally from January to July this year.
RP Data and Rismark's hedonic index of 145,000 sales for the first seven months of 2009 shows Australia’s housing recovery has continued in the month of July with solid across-the-board capital gains.
Australian home values rose by +0.9 percent in the month of July 2009. This brings total capital growth in the first seven months of 2009 to 5.9 percent.
Underpinned by historically low mortgage rates and only small rises in unemployment, Australian home values have now risen 1.8 percent past their February 2008 peak.
Rpdata's Tim Lawless says, "Australia’s residential market has been further supported by low mortgage default rates, at just 0.6 percent, compared with 5 percent in the US and 3 percent in the UK.”
Melbourne and Sydney home values have led the charge in 2009, rising by 8.5 percent and 6.6 percent respectively. Darwin is the strongest of all the capital cities, with home values increasing by 10.8 percent. Brisbane (+3.8 percent), Canberra (+5.4 percent), Perth (+2.5 percent) and Adelaide (+1.9 percent) have also experienced gains. Perth is no longer the laggard of Australian housing having outperformed Adelaide in the year to date.
Continuing the trend observed in the second quarter of 2009, houses (+1.1 percent) have outperformed units (+0.5 percent) in the month of July. In the three months to end July, house values increased by 2.4 percent while unit values rose by 1.6 percent.
Rismark International managing Director Christopher Joye says the housing market will grind out further modest gains over the course of the next 12 months.
Mr Joye says, “Home values are now increasing steadily in all areas including Australia’s most expensive suburbs. This has eviscerated the popular myth that the recovery was being driven exclusively by first timers at the cheaper end of the market. While first time buyers did initially furnish the early momentum, upgraders and investors have now taken over the baton as we anticipated. This is reflected in the superior performance of houses compared with units since the first quarter of 2009.”
According to the ABS, detached houses experienced 4.2 percent growth in the second quarter of 2009. As expected, the ABS was also forced to make substantial upward revisions to its first quarter estimates as well. The ABS’s ‘compositional bias’— whereby record numbers of first timers buying cheaper homes gave the appearance of a big house price decline in the first quarter based on their stratified ‘median price’ index—reversed out in the second quarter with the large 4.2 percent (positive) correction.
National rental yields have remained largely unchanged with the gross annualised rental yield for units being 5.2 percent while house rental yields are slightly lower at 4.4 percent.
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