Dr. Andrew Wilson is Senior Economist for Australian Property Monitors released his September quarter property market update.
Australia’s capital city housing markets recorded mixed results over the September quarter underscoring both the patchiness and fragility of the multi-paced recoveries that have emerged variously over the past year.
[sam id=36 codes=’true’] Although the national median house price increased by a moderate 2.2 percent over the quarter this was nonetheless down from the 2.5 percent recorded over the June quarter.
Other capitals however reported mainly subdued results over the September quarter with Brisbane house prices rising marginally by 0.7 percent, Adelaide and Perth were flat, and Canberra the only capital to report a fall in house prices down by 1.4 percent.
All capital cities recorded increases in median house prices over the year ending September with Sydney clearly the highest at 11.7 percent and Canberra the lowest at just 0.2 percent.
Most capitals however remain below the previous price peaks recorded three years ago with Brisbane still 5.6 percent short of its June 2010 median.
Strong buyer activity in Sydney translated into a 4.2 percent rise over the September quarter which rocketed the median house price over $700,000 for the first time to a new record of $722,718. Similarly Sydney unit prices rose by 3.3 percent breaking the $500,000 barrier for the first time to a record median of $515,035.
The Sydney median house price is now 11.6 percent higher than the previous cyclical price peak recorded in June 2011 and has increased by 9.0 percent over the first 9 months of this year – the best result of all the capitals.
The Melbourne median house price rose moderately by 2.2 percent over the quarter however the market remains firmly in catch-up mode with the median still 1.8 percent below that recorded at the June 2010 peak. Melbourne house price growth also remains well behind the levels recorded in 2009 and into 2010.
Melbourne units recorded the second consecutive quarterly fall in prices down by 0.6 percent with the median price remaining 5.7 percent below the previous peak.
Although Sydney and Melbourne each recorded their highest quarterly median house price increases for over three years, other capital city housing markets continue to struggle.
Brisbane has now recorded five consecutive quarters of median house price growth however increases have been minimal with prices up by just 1.5 percent so far this year.
Unit prices continue to fall in Brisbane decreasing by 1.5 percent over the quarter to be down by 4.6 percent over the full year. Falling unit prices may reflect the impact of an oversupply of new inner city apartments.
The Adelaide market remains subdued recording no growth in the median house price over the quarter with prices up marginally by just 1.1 percent so far this year. Adelaide remains the most affordable of the mainland capitals with a median house price of $438,648.
Perth median house prices were also flat over the quarter breaking a sequence of six consecutive quarters of growth. Despite recording no growth over the quarter Perth house prices have increased by 8.6 percent over the full year ending September, the second highest behind Sydney.
The Canberra market continued its volatile pattern of activity over the past 18 months with the median house price falling by 1.4 percent over the quarter. Weakness in the Canberra market may reflect ongoing concerns over the local economy, particularly in relation to public sector employment.
Hobart house prices increased by 2.4 percent over the quarter and were up by 5.7 percent over the full year ending September. Early signs are emerging of a revival in the local housing market although the median house price remains 5.1 percent below the previous peak.
Darwin recorded another typically strong seasonal increase in house prices over the September quarter rising by 5.0 percent to a new record high of $673,465. Darwin house prices have now increased by 8.1 percent over the past year.
Despite the overarching influence of the lowest interest rates in 60 years, local supply and demand factors continue to drive capital city housing market outcomes. Strong prices growth in Sydney and a moderate result for Melbourne are being offset by continued subdued performances by most other markets.
Housing market recoveries remain patchy, mixed and fragile.
Medium-term prices growth will continue to be constrained by modest levels of incomes growth and the impact on a still wary consumer of a predicted deterioration in economic activity and rising unemployment.
Strong investor activity particularly in the Sydney market can be expected to moderate as yields fall and sharply increased supply puts downward pressure on rental growth and upward pressure on vacancy rates.
The Sydney and Melbourne housing markets however will continue to record solid to strong buyer and seller activity over the remainder of 2013 at the highest levels since the strong market conditions of 2009 and 2010.
Most other capitals however will record modest at best prices growth with the Perth market showing early signs that recent solid growth may be plateauing”.