Prices for houses and other dwellings (flats, units and townhouses) across much of Australia are continuing to move upwards, according to September 2007 quarter price data released this week by the Real Estate Institute of Australia (REIA).
REIA President Noel Dyett said that despite rising interest rates, the availability of housing finance and a relative under-supply of housing resulted in steady growth in the housing market during both the quarter and the year to September 2007.
"For the first time, both Perth and Melbourne recorded a higher median than Sydney for other dwellings in September", Mr Dyett said.
"The upward movement in prices for other dwellings suggests that many home buyers are considering medium and higher density housing as more affordable options in a market where affordability is very low."
Mr Dyett attributed the change of heart to population growth driven by immigration, skills shortages in the construction sector and land release issues, together with investor preference for other asset classes.
REIA's data shows that in Melbourne, prices for both houses and other dwellings are rising rapidly as the city's population continues to grow strongly. There was a 5.1 per cent increase in houses to $431,000 in the September quarter, and a 9.9 per cent increase over the year.
Other dwelling prices also followed suit, with a 5.1 per cent increase over the quarter to $367,800, and a 13.9 per cent increase over the year.
Other strong performers in house prices are Adelaide and Hobart, which both saw a 2.3 per cent increase in prices to $320,000 and $317,000 respectively. This represented a 10.7 per cent annual growth for Adelaide and a 9.3 per cent annual growth for Hobart.
The market is steadier in Sydney and Perth, although these two cities have the highest prices for houses in Australia.
After several quarters of lacklustre prices in Sydney, there has been a modest recovery this quarter with 1.5 per cent growth in house prices to $538,400 (a 3.4 per cent increase over the year).
There was a slight fall in Sydney other dwelling prices, down 0.9 per cent to $360,900, with no change recorded in the median price over the year.
Perth has seen a slight recovery in the September quarter, with its median house price increasing by 0.7 per cent to $455,000, after a short lull in price growth during the first half of the year. Prices for other dwellings were stronger however, with a 2.8 per cent quarterly growth and an 8.8 per cent annual growth to $370,000.
Like Perth, Darwin house prices have not shown much growth in the quarter, up 1.3 per cent to $400,000 (a 3.9 per cent increase over the year). Other dwelling prices however have skyrocketed, with a 14.6 per cent quarterly increase to $320,000 (a 28.3 per cent increase for the year to September 2007).
Canberra was the only capital city to experience a slight decline in house prices in the September quarter, down 0.4 per cent to $425,000. This is still 8.1 per cent higher than the corresponding quarter last year. Other dwelling prices were up 3.3 per cent over the quarter to $346,000, a growth of 11.0 per cent over the year.
Noel Dyett noted that there are two distinct markets emerging in Australia, between the first home buyer and `established' buyers.
"In the first home buyer market, declining affordability is having a major impact and buyer numbers have fallen, with first home buyer loans only representing 17.7 per cent of total loans in September, compared with the longer term average of 20 per cent", he said.
"There is a second healthier market for established buyers who are able to leverage equity and higher incomes to cope with the increasing median prices for both houses and other dwellings."
Median prices were not available for Brisbane at the time the report was published.
