Continued Growth in house prices

House prices have continued to grow in the December quarter and four out of eight capital cities in Australia have a median house price above $450,000, according to Real Estate Institute of Australia.

REIA’s president Noel Dyett said this is good news for home owners, but, it is making it increasingly difficult
for potential owners to enter into the market.

Melbourne saw significant price increases over the past three and 12 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.

And 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 to $551,000.

Meanwhile, the REIA shows Melbourne now has the highest median price for other dwellings in the country, with prices rising 5.4% over the quarter and 21.9% over the year to $390,000.

As with the house market, Canberra, Perth and Sydney are amongst the four most expensive locations for other dwellings, all with a median price above $360,000, although Sydney prices were flat during the quarter and the Perth median price for other dwellings fell by 0.5%.

The Canberra median price for other dwellings continues to rise significantly, with a 15.8% increase over the year. The strongest quarterly growth in other dwelling prices was recorded in Adelaide and Hobart, both also very strong performers over the year.

Dyett said demand continues to be strong for housing, whilst 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,” he concluded.

Mortgage Choice’s national manager of corporate affairs Warren O’Rourke said 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,” he added.

According to the REIA, all cities except Perth recorded price growth, where the median house price was unchanged from the September quarter.

Brisbane prices for December quarter not yet available (Source: REIA)

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Continued Growth in house prices

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