Median house prices patchy across the country

By Stephen Naylor
Sep 6, 2006

The latest figures show that median prices for established housing are patchy across Australia, according to Mortgage Choice/REIA Real Estate Market Facts released today.

"June quarter 2006 figures compared with the previous year indicate a booming market in Western Australia with prices up 33.9% and in the Northern Territory where prices are up 25.1%. Perth now has the second most expensive house price in Australia," said REIA President Tony Brasier.

"This is largely in response to the resources boom, increased employment and migration with no immediate end in sight. Perth particularly might have more growth to come in the short term," he added.

Price growth was healthy in Canberra (up 7.8% over the year), Tasmania (up 6.5%), Victoria (up 4.2%), South Australia (up 4.2%) and Queensland (up 3.5%), while in New South Wales prices continued to slow down significantly (down 3.5% over the year).

"The WA boom, NSW slump, and more stable markets elsewhere is a situation not isolated to the housing market," said Mr Brasier.

"Similar parallels can be seen in other sectors, yet monetary policy is firmly directed at a single economy. Two interest rate rises this year, with the prospect of another to come, are hurting home buyers, particularly in New South Wales, and especially in the case of first home buyers across the country."

"This is putting considerable pressure on rental markets, and vacancy rates are continuing to decline around the country, ranging from a June quarter 2006 low of 1.6% in Adelaide to 2.4% in Darwin. Median rent increases over the year to June 2006 have outpaced the 4% annual CPI increase in many areas" he said.

Mortgage Choice National Corporate Affairs Manager, Warren O'Rourke, supports the REIA in its call for consideration of the impact another rate rise will present to borrowers generally, and in particular on the New South Wales market, which is already flat.

"With petrol prices already impacting the household budget, borrowers can well do without any further upward movement in interest rates," Mr O'Rourke said.

Mr Brasier said that while the news is not the best for first home buyers and renters, the current housing market offers good news for investors.

"Although the property market varies significantly across the country, one thing that remains constant is the ongoing excellent returns which can be achieved by long-term investors," Mr Brasier said.

The June quarter Real Estate Market Facts reports average annual returns across the country on three bedroom houses of between 13.6% and 15.2% over the period from March 1983 to the present. Similarly, two bedroom other dwellings returned between 10.3% and 14.9% in the period from November 1988 to the present.

Source: APR