Steve Keen might have to climb Kosciusko!
A five-month surge in Melbourne home prices has undone all of the damage wrought by the global financial crisis, pushing up the median house price to $469,357 and the median unit price to $377,077 - both record highs.
Melbourne home prices have soared the fastest in the nation so far this year, jumping 6.1 per cent in five months to eclipse 5 per cent-plus gains in Sydney and Darwin. Only in Perth did prices continue to fall.
Produced by RP Data the May price figures are regarded as more representative than those produced by real estate agents as they only compare "like sales" with "like sales" and so are not distorted by changes in the composition of the stock sold They are used by the Reserve Bank and cover 98 per cent of Australian sales.
"Our results herald a national recovery," said RP Data's research chief Tim Lawless...
Our index was the first to capture the start of the downturn and was the first to capture the start of the recovery from January 2009."
Mortgage provider Rismark, which part-finds the RP Data index declared "doomsayers defied".
"The housing market has been the cornerstone of the our economy’s stability in 2009, said chief executive Christopher Joye. "The robust rise in values this year has given builders and developers the confidence to hire labour and buy materials to invest in new homes. It has also given existing owners the confidence that their largest investment has been a secure store of wealth while other asset classes
have been decimated.”
Melbourne houses sold in May stayed on the market for an average of just 29 days, the shortest time in Australia.
The most dramatic prices rises have been away from the centre of Melbourne in Hume City in the west, Eastern Outer Melbourne, and Frankston city. Prices in inner Melbourne and the Mornington Peninsula continued to fall.
"So far the recovery has been led by first home buyers, said Mr Lawless. "But
we are expecting to see more investors as rental yields continue to climb."
Separately-released Reserve Bank borrowing figures showed housing and government borrowing to be the only bright spots in credit markets with both personal and business borrowing sliding further.
The Housing Industry Association reported a slide in house sales in May with Victorian sales down 8.7 per cent, most likely because of uncertainty about what was going to be in the May Budget.
The ANZ Bank said it placed more weight on the house price figures, with economist Alex Joiner declaring now unlikely "the Armageddon scenario foreshadowed by some".
"From here on we expect prices to continue to show modest, consolidating, growth as although the property market is performing well, broad-based economic recovery seems some way off," he said.
Published in today's Age