Property price growth in Australia easing to a more sustainable level

Taylor Scott International News

Home price growth in Australia eased again during the September 2014 quarter but are up 9.1% compared to a year ago, the latest data from the Australian Bureau of Statistics show. Sydney continues to drive residential property price increases with the Residential Property Price Index (RPPI) for Sydney up 2.7% in the September quarter of 2014 and 14.6% in the previous year. As well as the rise in Sydney, the RPPI rose in Melbourne, Brisbane, Adelaide and Hobart by 1%, and by 0.3% in Darwin and Canberra. Perth was the only city to show a decrease in prices with the RPPI decreasing 0.1%. The total value of Australia’s 9.4 million residential dwellings increased to $5.3 trillion. The mean price of dwellings in Australia is now $563,100, an increase of $8,300 over the quarter. Established house prices for Sydney rose 3.2% and attached dwelling prices rose 1.8% while overall the RPPI for the weighted average of the eight capital cities rose 1.5% in the September quarter of 2014 and 9.1% in the previous year. This includes growth of 9.2% in established house prices and an 8.5% increase in attached dwelling prices over the year. The figures indicate that price growth is easing to a much more sustainable rate, according to Shane Garrett, senior economist at the Housing Industry Association (HIA). ‘The annual rate of home price growth nationally is back in single figures for the first time in a year. At the same time, new home building is stretching to its busiest year in two decades. This is no coincidence,’ he explained. ‘Clearly, the housing industry has risen to the challenge in terms of seeking to meet Australia’s increased housing requirements. However, capacity is bursting at the seams. Any home builder will tell you of the difficulties in sourcing crucial trades like bricklayers, at a time when training budgets in the industry are being slashed by government,’ he added. Garrett also pointed out that the situation around residential land supply is also stifling new home building. It is important that federal and state governments ease the bureaucracy around the release and development of land for new housing. This will help ensure that strong dwelling price pressures do not emerge again in future,’ said Garrett. ABS figures also show that new home lending reached a fresh high for the cycle in the September 2014 quarter, reaching its highest level in 20 years. But Harley Dale, HIA chief economist, said that the aggregate number of loans for first home buyers is still very low from a historical perspective. ‘Policy reform is vital to turning this situation around and needs to be aimed at the excessive and inefficient taxes and regulation levied on housing. First home buyer loans reached conspicuous troughs in the early months of 2011, 2013, and 2014, although these levels were 12% higher than the record low in the early 1990’s recession. Loan numbers have only lifted by 5.1% from this latest 2014 trough,’ he explained. The total number… Continue reading →

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