Housing prices up at a cracking pace
ANALYST: Tim lawless | November 17, 2007
HOUSE prices around the country grew at a cracking 10.89 per cent for the year to August -- their fastest pace since the housing boom ended in late 2003. Indicative figures to the end of September show the market should accelerate even further to break the 12 per cent mark.
The only markets that are showing a slowing in price growth are Perth and Darwin.
Although rapid, it is still nowhere near the national price rises of over 30 per cent a year recorded during the 1999-2003 housing price surge, and another round of interest rates may slow the head of steam.
Adelaide, the most affordable capital city with a median price of $355,908, outstripped all other capitals with prices rising 22.4 per cent during the year to August.
I think we can now officially declare Adelaide to be in a boom with price growth well and truly higher than the 20 per cent per annum benchmark.
We expect growth close to 25 per cent when our RP Data/Rismark final September figures are released later this month.
Brisbane is not far behind, with prices increasing 19.02 per cent during the year ending August.
In raw dollar terms, house and unit prices in Brisbane have increased by $65,080 over the year, the highest dollar value increase of any capital city.
The average time on market and average level of vendor discount, both excellent forward indicators, are both very low in Brisbane.
Houses and units are averaging just 24 days and 14 days to sell and buyers are managing to negotiate only 3.8 per cent off the asking price of a property.
Sydney's recovery now appears locked in with prices rising 4.7 per cent over the year to August.
Preliminary figures for September show growth increasing further to reach 6.9 per cent -- a far cry from the start of 2007 when Sydney prices were languishing either side of zero growth.
The Perth market continues to fall back with price growth over the quarter just 2 per cent.
The average days on market figure has blown out to two months, which is three times higher than the same period one year ago, and preliminary figures suggest the market will slow further over the coming months.
Housing affordability will continue to be a major challenge across Australia. Sydney's median house price is the highest, at $566,460, followed by Perth, at $513,150, then Canberra at $488,110.
The Government faces a political conundrum with the twin goals of improving housing affordability and maintaining the value of existing homes in the outer suburbs conflicting.
While politicians want to provide cheaper housing, they do not, at the same time, want house prices to fall considering that 65 per cent of all Australians own their own home.
As capital growth becomes less of a risk in the key markets, investors are becoming increasingly active.
Over the past six months Australian investors channelled $41.83 billion into Australian real estate, the highest dollar value on record.
Rental yields are somewhat more attractive than they were a year ago, however few markets are offering gross yields above 5 per cent.
Canberra and Darwin are the exceptions. The average rental yield for houses and units in Canberra are 5.14 per cent and 6.2 per cent respectively while at Darwin house and unit rents are yielding 5.4 per cent and 5.9 per cent respectively.
These higher than average yields demonstrate a severe shortage of rental stock in these locations, which in turn has driven weekly rental prices up significantly.
The surge in investment levels also demonstrates the willingness of most investors to look beyond a low rental yield where there is the prospect of strong capital gains.
Tim Lawless is the research director for RP Data
ANALYST: Tim lawless | November 17, 2007
HOUSE prices around the country grew at a cracking 10.89 per cent for the year to August -- their fastest pace since the housing boom ended in late 2003. Indicative figures to the end of September show the market should accelerate even further to break the 12 per cent mark.
The only markets that are showing a slowing in price growth are Perth and Darwin.
Although rapid, it is still nowhere near the national price rises of over 30 per cent a year recorded during the 1999-2003 housing price surge, and another round of interest rates may slow the head of steam.
Adelaide, the most affordable capital city with a median price of $355,908, outstripped all other capitals with prices rising 22.4 per cent during the year to August.
I think we can now officially declare Adelaide to be in a boom with price growth well and truly higher than the 20 per cent per annum benchmark.
We expect growth close to 25 per cent when our RP Data/Rismark final September figures are released later this month.
Brisbane is not far behind, with prices increasing 19.02 per cent during the year ending August.
In raw dollar terms, house and unit prices in Brisbane have increased by $65,080 over the year, the highest dollar value increase of any capital city.
The average time on market and average level of vendor discount, both excellent forward indicators, are both very low in Brisbane.
Houses and units are averaging just 24 days and 14 days to sell and buyers are managing to negotiate only 3.8 per cent off the asking price of a property.
Sydney's recovery now appears locked in with prices rising 4.7 per cent over the year to August.
Preliminary figures for September show growth increasing further to reach 6.9 per cent -- a far cry from the start of 2007 when Sydney prices were languishing either side of zero growth.
The Perth market continues to fall back with price growth over the quarter just 2 per cent.
The average days on market figure has blown out to two months, which is three times higher than the same period one year ago, and preliminary figures suggest the market will slow further over the coming months.
Housing affordability will continue to be a major challenge across Australia. Sydney's median house price is the highest, at $566,460, followed by Perth, at $513,150, then Canberra at $488,110.
The Government faces a political conundrum with the twin goals of improving housing affordability and maintaining the value of existing homes in the outer suburbs conflicting.
While politicians want to provide cheaper housing, they do not, at the same time, want house prices to fall considering that 65 per cent of all Australians own their own home.
As capital growth becomes less of a risk in the key markets, investors are becoming increasingly active.
Over the past six months Australian investors channelled $41.83 billion into Australian real estate, the highest dollar value on record.
Rental yields are somewhat more attractive than they were a year ago, however few markets are offering gross yields above 5 per cent.
Canberra and Darwin are the exceptions. The average rental yield for houses and units in Canberra are 5.14 per cent and 6.2 per cent respectively while at Darwin house and unit rents are yielding 5.4 per cent and 5.9 per cent respectively.
These higher than average yields demonstrate a severe shortage of rental stock in these locations, which in turn has driven weekly rental prices up significantly.
The surge in investment levels also demonstrates the willingness of most investors to look beyond a low rental yield where there is the prospect of strong capital gains.
Tim Lawless is the research director for RP Data