The latest figures from Australian Property Monitors show that while Australian housing growth slowed to 2.4% during the June quarter, the annual house price growth came in at a higher-than-expected 15%.
APM economist Matthew Bell said “APM expects further price growth moderation in the next three to six months as the low levels of housing finance and the risk of further rate increases weigh on the market. However, the medium to long-term outlook for property prices remains strong, and we expect the 2010 annual rate of national house price growth to settle in the eight to 10 per cent range.”
He said the 6% growth for the first six months of the year indicates the entire 2010 growth should be “much stronger” than previously expected.
The APM data shows Melbourne is still the country’s best performing property market, with annual growth of 27.9% pushing the median price to $578,447, representing growth of 4.4% for the quarter. However, Melbourne price growth is slowing with that quarterly growth being the lowest since March 2009. Units in Melbourne grew 15.6% pushing the median price to $413,000
The median house price in Canberra increased 16.5% over the last year $568,520; while units prices increased by 10.7%.
The Sydney median house price grew by 13% over the year to reach $625,488 (+2.3% over the last quarter.) Sydney unit prices increased by 11.9%, (up by 2.8% in the last quarter) to $435,996
The Adelaide median house price grew by 11.9% over the year to reach $455,582 while unit prices increased by 7.8% to $294,841.
The Perth market is showing signs of recovery with its median house price increasing 9.3% to $525,574 and units increased by 14.6% over the year.
Brisbane house prices increased by 7.3% bringing the median price to $457,787 and units increased by 5.6%.
Median house prices actually dropped during the quarter in Hobart and Darwin by 1.9% and 0.7% respectively, to $308,434 and $581.290.
Reported in SmartCompany Bell said: “But I think the performance here is strong than anyone would really expect. Of course the market is definitely slowing, and we’re seeing low auction clearance rates, but 2.4% is higher than the long-term trend and in cities like Sydney and Melbourne, growth is still very strong.”
Part of the reason for this growth is demand from investors. Bell points to ABS data which shows that as owner-occupied demand for loans hit a nine-year low in April, investor loans grew 17.6% in the previous 12 months.
“So we have that investor demand, and we also have to consider this is a Winter report, and with Spring coming up I think we can expect some strong results. I certainly do think Melbourne has a bit to cool, and maybe Sydney as well, but I don’t think we’re going to get anywhere close to falling prices.”
Bell also says higher interest rates for the rest of the year are unlikely, given the official inflation data released yesterday.
“I think the interest rate risk has largely disappeared, given yesterday’s announcement. Westpac have come out and said they don’t expect any rises this year, and Macquarie have said the same. I would think that interest rate rises have largely disappeared for the rest of the year.”
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