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PROPERTY VALUES SURGE IN 2009
Property prices surged in the first part of 2009, erasing last year's losses and bucking the global trend. According to the RP Data/Rismark Australian Home Value Index, which covers all dwelling types, prices rose by 2.8 percent in the first four months of 2009, with every mainland capital city except Perth registering gains.
Darwin was the top performer, with values up 5.3 percent in the four months to April, while Sydney and Melbourne property snared gains of 3.9 and 4.5 percent respectively. Economists said a variety of factors were behind the rise. "A combination of generational-low interest rates, tight rental markets, the expanded first homebuyers grant and soggy sharemarkets have caused more buyers and investors to turn their attention to the property market," said Craig James, chief economist at CommSec, adding that the price rise is good news for Australians, the Reserve Bank and the Federal Government.
"Modest gains in home prices boost consumer confidence, wealth and spending levels," Mr James said. "If confidence and spending levels lift, this will in turn boost employment and ensure that the flat spot experienced by the economy proves brief." Sydney remains the nation’s most expensive city for real estate, with an average dwelling value of $522,797, while Perth remains the second most expensive, despite seeing falls of 5.7 percent over the past 12 months. Rismark's international managing director Christopher Joye said values are generally rising across the board.
"Our analysis demonstrates that home values are rising in around 80 per cent of all suburbs with only the top 20 per cent of suburbs ranked by price suffering material falls," Mr Joye said. Tim Lawless, RP Data's national research director, said that fears the government’s increased first home buyer grant, which was extended in the Federal Budget earlier this month, are fuelling an unsustainable debt boom are misplaced.
"Home values in Australia's mortgage belts, which are the prime first home buyer markets,were flat or falling between 2004-07 while the inner city and affluent markets enjoyed consistent growth. In 2008-09 we have seen a reversal of these fortunes," he said.
Commsec's Mr James added that while the rise in property values is welcome, it is not necessarily a surprise as demand continues to outstrip supply. "Australia has been called the 'wonder from down under' because our home prices are not falling at 20 per cent annual rates like in the US and UK," he said.
"However the situation is far from remarkable. Population is rising at the fastest rate in 40 years, interest rates are super-low and we have a very tight rental market. It is simple demand and supply – demand is outstripping the supply of homes, putting upward pressure on prices."
by Stuart Fagg, ninemsn Money
Please feel free to contact me on email: Jenese Malone
See detailed article on house shortages in Australia here...
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