Sydney property boom drives surging national houses prices- Dr. Andrew Wilson

Dr Andrew Wilson senior economist at Australian Property Monitors just released his latest state of the national property market report and gave some forecasts for our real estate market for the year ahead.

Here were his….

Key Findings

  • The national house price surged over the December quarter to a new record median of $557,556 following strong growth of 3.7 percent – the highest quarterly rise for four years.
  • The national median house price increased by 9.8 percent over 2013 – also the best annual result since 2009.
  • The strong increase in the national house price reflects an extraordinary contribution from Sydney where prices increased by 6 percent – the second highest quarterly rise in house prices on record for that city.
  • Sydney’s median house price increased by an exceptional 15.1 percent or over $100,000 in 2013 to a record $763,169. This was the strongest calendar year growth in house prices recorded since 2003.
  • All capital cities recorded growth in house prices over the December quarter with all capitals also recording an increase in median house prices over the calendar year for the first time in four years.
  • Melbourne and Perth recorded solid results over 2013 with median house prices increasing by 8.6 percent and 8.4 percent respectively. The Perth median house price now exceeds $600,000 at a new record $605,856. The Melbourne median house price exceeded its previous peak recorded in June 2010.
  • The volatile Canberra market ended the year on a positive note with an increase in the median house prices over the December quarter of 2.3 percent – its best quarterly result in nearly four years.

[sam id=36 codes=’true’]Let’s now look at the individual Capital City markets

Sydney

  • House prices rose strongly by +6.0% over the December quarter following a +3.9% rise over the previous quarter
  • Unit prices rose by +4.3% over the quarter following an increase of +3.7% over September
  • Sydney’s median house price is yet another record at $763,169 with the median unit price also a record at $541,992
  • Annual house prices have increased by +15.1% with units up by +10.9%

Melbourne

  • Melbourne house prices rose solidly by +3.2% over the quarter with unit prices up similarly by +3.1%
  • Melbourne house prices have risen by +8.6% over the year ending June with units increasing by +6.8%
  • The median house price for Melbourne at $568,824 has now exceed its previous price peak of June 2010 with the median unit price at $421,759 also a new record

Brisbane

  • Median house prices continue to recover with an increase of 2.1 % over the quarter – the best result in nearly four years
  • Annual house prices increased by +5.0% and are now just -2.2% below the previous peak recorded in June 2010
  • Brisbane unit prices fell by -1.5% over the quarter to be up by just +0.4% over the year

Perth

  • House prices increased moderately by +1.8 percent over the December quarter with unit prices rising strongly by +3.7%
  • Annual median houses prices for Perth are up also up strongly by +8.4% with unit prices up by +9.3%

Canberra

  • Median house prices resumed growth over the December quarter increasing by +2.3% to $588,242 however unit prices fell by -0.7% over the quarter.
  • Houses prices increased by +3.0% over 2013 with units up by +1.1%

Adelaide

  • A clearly recovering Adelaide market recorded its third consecutive increase in house prices over the December quarter – rising by +1.7%.
  • Adelaide house prices rose by +2.8% over 2013 with unit prices increasing by just + 0.3 %.
  • The Adelaide median house price remains the lowest of all the mainland capitals at $446,153

Hobart

  • Hobart’s median house price rose by +2.8 percent over the December quarter – the best quarterly result in four years.
  • Hobart’s median house price increased by a solid +5.1% over 2013 but remains -4.1% below the previous price peak recorded three years ago.

Darwin

  • Darwin’s median house price increased marginally by +0.8% with unit price growth flat over the December quarter
  • Darwin’s annual median house price however rose by +6.9% with units also up strongly by +8.4%

In summary:

Australian capital city housing markets continued solidly in revival mode over the December quarter with all capital cities recording prices growth.

2013 has been the strongest year for national house price growth since 2009 with the median house price increasing by 9.8 percent. All capital cities recorded an increase in median house prices over the calendar year for the first time in four years.

The Sydney housing market was a significant contributor to national house prices growth in 2013 with Melbourne and Perth also reporting solid results.

Extraordinary prices growth in Sydney over the December quarter reflected and validated the record auction clearance rates recorded by APM over the spring selling season.  Sydney’s median house price increased by an exceptional 6 percent which is the second highest quarterly increase in house prices on record. Sydney house prices surged by 15.1 percent over 2013 which was the strongest rise over a calendar year prices since 2003.

Sydney’s median house price increased by over $100,000 through 2013 to a new record high of $763,169. Sydney unit prices also performed strongly over 2013 increasing by 10.9 percent to $541,992 – also a record.

Melbourne house prices increased solidly over the December quarter rising by 3.2 percent with unit prices increasing similarly by 3.1 percent. Melbourne house prices were the second-best performers behind Sydney over 2013 increasing by 8.6 percent to a new peak of $568,824.

The Brisbane housing market continues its steady revival with the median house price increasing by 2.3 percent over the December quarter for the best quarterly result in 4 years. House prices increased by 5 percent over 2013 with unit prices however up by just 0.4 percent. Brisbane house prices are now just 2.2 percent below the previous price peak of June 2010 and closing fast.

Adelaide is showing positive signs of a sustained recovery in house prices with the December quarter median increasing by 1.7 percent – the third consecutive quarterly rise. Adelaide house prices rose by 2.8 percent over 2013 with unit prices however increasing by just 0.3 percent. The Adelaide median house price remains the lowest of all the mainland capitals at $446,153.

The Perth housing market recorded another solid year in 2013 with median house prices increasing by 8.4 percent and unit prices up strongly by 9.3 percent. Prices growth resumed over the December quarter after signs emerged of the market plateauing over the previous September quarter. House prices however increased by 1.8 percent over the quarter with unit prices up sharply by 3.7 percent. Perth has now recorded 8 consecutive quarters of house price growth and six consecutive quarters of unit price growth. Perth’s median unit price exceeded $400,000 for the first time at $406,196

The volatile Canberra housing market finished the year positively recording a solid increase in the median house price of 2.3 percent to $588,242. This followed a fall of 0.9 percent over the previous September quarter. Unit prices however fell by 0.7 percent over the quarter. Canberra house prices increased by 3 percent over 2013 with unit prices up by 1.1 percent.

The Hobart market continues on the path to recovery with median house prices increasing solidly by 2.8 percent over the December quarter – the third consecutive rise and the best quarterly result for four years. Hobart’s median house price increased by a solid 5.1 percent over 2013 but remains 4.1 percent below the previous price peak recorded three years ago.

House price growth in Darwin flattened over the December quarter with the median house increasing by just 0.8 percent with a steady result for the median unit price. House prices however rose by 6.9 percent over 2013 with unit prices up by 8.4 percent.

2013 has been a solid year of recovery for the national housing market driven by the lowest interest rates in 60 years, still reasonable overall economic performances and rising confidence. All capital city median house prices are now at or closing in on record levels.

Although solid end of year buyer momentum in all markets will ensure a positive start to 2014 affordability constraints and waning economic activity will act to moderate prices growth through the year.

The Sydney housing market has been a super-star performer through 2013 with December quarter buyer activity rising to record levels.

Melbourne and Perth have also been solid performers with other capitals – although improving, still recording moderate at best prices growth.

The Sydney market has been supercharged by continuing record levels of investors and rampant changeover buyer activity in the $1 million to $2 million price ranges – particularly in the upper north shore and inner west suburban regions.

The current level of prices growth in Sydney however is unsustainable particularly given the likely continued deterioration of the local economy and the flood of new rental properties overshooting underlying market fundamentals.

Prices growth in Sydney and Melbourne is set to be significantly less in 2014 compared to 2013 with most activity occurring over the first half of the year.

The Perth market however will remain solid this year with Brisbane house price growth set to accelerate as the local economy moves up a gear.

Adelaide, Canberra and Hobart however will continue to record modest prices growth over 2014 with most activity again likely to be over the first two quarters of the year.

 

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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