House prices continue to rise
Solid to strong market conditions prevail in most capitals over June quarter
Australian house prices continued to rise over the June quarter with most capitals reporting higher or similar growth levels than the previous March quarter.
The national median house price increased by 1.9 percent compared to the 1.7 percent rise of the previous quarter. The national median unit price also recorded a sturdy rise of 2.7 percent – also higher than the 2.0 percent result of the previous quarter.
The Sydney housing market remains clearly the standout capital city performer with another strong result reported over the June quarter. The Sydney median house price increased by 3 percent, smashing through the $800,000 barrier for a new record high of $807,880. The Sydney median house price increased by 16.4 percent or just under $114,000 over the 2014 financial year. Both the quarterly and annual Sydney results were the best of all the capitals.
Sydney house price growth over the June quarter exceeded the March quarter result of 2.6 percent although remained well below the 5.6 percent recorded over the December quarter last year – clearly the high water mark of the current growth cycle. Similar to houses, Sydney unit prices increased strongly by 3.5 percent over the quarter to be up by 12.2 percent over the year.
The Melbourne housing market reported another solid quarter of growth over June with the median house price increasing by 1.8 percent – again higher than the March result. Melbourne house prices increased by 10.3 percent over the year ending June with unit prices up by 2.7 percent over the quarter to be up by 8.8 percent over the year.
The Brisbane housing market continues to gather momentum now recording eight consecutive quarters of house price growth. The Brisbane median house price increased by 1.4 percent over the June quarter a similar result to the 1.7 percent recorded over the March quarter. The Brisbane median house price is now at a new record level at $47,612 having finally recovered from its previous price peak recorded over June 2010. Brisbane house prices increased by 6.8 percent over the year ending June which was the highest annual result in 4 years.
Housing market activity in Adelaide continues to report solid results with the median house price increasing for the third consecutive quarter over June - up by 1.2 percent and remaining the mainlands most affordable capital at $463,124. Adelaide unit prices increased strongly over the quarter rising by 4.4 percent.
Prices growth in Perth remains subdued with the median house price increasing by just 0.4 percent over the June quarter following a modest rise of 10.9 percent over the March quarter. Perth house prices have increased by 5.2 percent over the year ending June which is the worst performance of all the major capitals.
Positive signs at last from the recently subdued Canberra housing market with the median house price increasing by 2.2 percent over the quarter to $576,367. The solid increase in prices however follows a sharp fall over March and continues the recent volatile pattern of house price growth with a sustained trend yet to emerge. Canberra house prices remain 0.5 percent below the level of a year ago – the only capital to record a fall in house prices over the past year. In contrast to houses Canberra unit prices fell by 0.8 percent over the quarter.
Although Hobart house prices increased modestly by 0.8 percent over the June quarter that market has nonetheless now recorded four quarters of house price growth following a subdued period of housing market activity. Hobart house prices increased by 6 percent over the year ending June which was the best annual result for that city since June 2010. Despite recent growth the Hobart median house price remains 3.3 percent below its previous price peak also recorded over the June quarter 2010 - the only capital not have recovered to the previous cyclical peak level.
The volatile Darwin housing market produced another subdued result over the June quarter with house prices falling by 1 percent following a fall of 1.6 percent over the March quarter. Despite these falls the Darwin median house price increased by 2.2 percent over the year which is nonetheless the lowest annual growth result for that city since June 2012
Australia’s capital city housing markets show no signs of a significant slowdown in prices growth through the mid-year period with most capitals maintaining or exceeding the solid to strong price growth levels recorded over the previous quarter.
Other leading indicators of housing market activity such as home loans and auction clearance rates point to continued solid buyer activity through 2014 fuelled by low interest rates, restored and rising confidence, a reasonable general economic foundation and, particularly for the Sydney market, record levels of investor activity.
Sydney, Melbourne and Perth have led the capitals in market activity over the past year however rising affordability barriers due to modest incomes growth constraining prices growth will act to moderate growth in those markets through 2014 with annual outcomes likely around half the strong 2013 results.
Brisbane, Adelaide and Hobart however are all set to record stronger years for house price growth over 2014 compared to the 2013 results as confidence returns to those markets following subdued periods of buyer activity largely reflecting underperforming local economies.
Darwin and Canberra currently remain the capital city underperformers although Darwin’s strong economy and underlying shortage of housing will act to re-ignite house prices sooner rather than later. Early signs are emerging of an improvement in the Canberra market although much will as usual depend on a better performance from the local economy for a sustained revival in buyer activity and prices growth.
Dr Andrew Wilson is Senior Economist for the Domain Group Twitter@DocAndrewWilson