The December quarter 2007 was a bumper quarter for Australia house prices across the country, with a house median above $450 000 (about R3,14m) for four out of the eight capital cities (Sydney, Melbourne, Perth and Canberra), and price growth in all cities except Perth where the median house price was unchanged from the September quarter, according to the Real Estate Institute of Australia (REIA).
“This is, of course, welcome news for home owners; however, it is making it increasingly difficult for potential owners to enter into the market,” says Real Estate Institute of Australia President, Noel Dyett.
“Demand continues to be strong for housing, while the supply of new housing stock remains subdued, thus driving prices upwards. However, ongoing significant price rises may not be sustainable in the medium and long term.
“The dampening effects of interest rate rises in November and February on demand and prices are likely to be seen when the March and June quarter 2008 data are available, as the number of sales negotiated after the November interest rate rise and included in this price data is relatively small. The REIA urges the Reserve Bank to take this into consideration as it makes its decision about further rate rises in coming months,” says Dyett.
Melbourne saw significant price increases over the past three and twelve months, with house prices increasing by 12,8% over the December quarter, and 23,4% over the year. Adelaide also experienced a high growth rate over the year, with the median increasing by 18,6% during 2007. Canberra, Darwin and Hobart all recorded double digit growth in house prices over the year to December 2007, but more modest growth over the quarter.
After an extended period of sluggish growth, Sydney house prices have begun moving upwards, recording a 1,1% increase in the December quarter and 4,8% growth over the year..
Mortgage Choice National Manager Corporate Affairs, Warren O’Rourke says, ‘Rising property values are great news for many investors who can expect to enjoy increased returns. However, they should be careful to take a long term approach to their property investment portfolio by monitoring each property’s ongoing maintenance needs and being fastidious when it comes to researching areas that are likely to experience price booms in the coming years.’
The recent national Mortgage Choice survey of 1,000 property investors showed Australians are feeling upbeat and confident, with 20% of respondents looking to build a property investment portfolio of ‘as many (properties) as possible’ in the next two years, 34% planning up to three properties, 19% four to five, 10% six to 10 and 2% 11 to 20.