Friday, January 01, 2010
Melbourne house prices soared an extraordinary 17 per cent during the first 11 months of 2009, by far the fastest growth rate in the nation.
The latest RP Data index, compiled from Valuer General's figures shows a typical Melbourne house that sold for $443,900 at the start of the year fetched somewhere between $440,300 and $580,000 toward year's end.
The $580,000 figure - an all-time record - is the median price for November. RP Data warns that median monthly prices are volatile and says a better guide is to examine median prices over a number of months.
The news came as the Australian share market closed at its highest level for the year last night, the S&P/ASX 200 finishing at 4870.6, up 31 per cent over the year and up 55 per cent from its trough.
Melbourne's house price jump of 17 per cent eclipsed Darwin's 15 per cent, Hobart's 14 per cent and Sydney's 12 per cent... It more than offset the 5 per cent slide in Melbourne prices that followed the global financial crisis.
Apartment prices increased even more strongly, a typical unit jumping in price 19 per cent to $440,000.
CommSec economist Craig James identified immigration as a key driver of prices, noting that Victoria received an ourtsized share.
"With population growing at the fastest rate in 40 years boosting demand for homes, state and federal governments need to be focussed on ways to get more homes built. Barriers to housing investment need to be removed, and scrutiny needs to be applied to lifting land production and revising zoning laws," he said.
Importantly prices continued to rise in both October and November despite back-to-back interest rate rises in those months and the phase out of the $7000 - $14,000 First Home Owners Boost.
"First home buyers have been trending down since peaking in May," said RP Data research director Tim Lawless. "But the gap is being filled by upgraders and investors who are much less sensitive."
Separately-released credit figures showed borrowing for housing up a further 0.7 per cent in November and up 8 per cent over the year.
Mr James said the resilience of the housing market increased the chance of a further interest rate hike when the Reserve Bank board next met in February.
"The main worry is that home prices are rising at unsustainable rates in some capital cities such as Darwin, Hobart and Melbourne. The last thing anyone wants to see in 2010 is another boom-bust scenario."
"The main uncertainty for the Bank is the extent to which the housing market slows in the new year following the latest rate hikes and the expiry of the home buyers boost."
Mr Lawless said he expected more modest house price growth in 2010.
"2009 was exceptional and surprising. We would expect conditions to moderate into 2010 as interest rates continue move back to a neutral setting and the remainder of the stimulus is rolled back. But the primary driver of growth will continue to be an under supply of housing coupled with extraordinary demand fuelled by population growth," he said.
Yesterday's share market peak of 4870.6 is still a long way from the market's pre-financial crisis high of 6851.
There's little joy for investors in tomorrow's Age's half-yearly economic survey with economists predicting only a mild increase in the ASX 200 of 5.4 per cent throughout 2010.
In the 11 months to November
Melbourne house prices up 17%
Darwin house prices up 15%
Hobart house prices up 14%
Sydney house prices up 12%
Canberra house prices up 11%
Brisbane house prices up 6%
Perth house prices up 6%
Adelaide house prices up 5%
Source: RP Data
Published in today's SMH and Age
RP Data November 2009
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