Article source: smh.domain.com.au
Australia’s home values have surged by 3.5 per cent in the first quarter of 2014 with analysts describing recent growth as ‘‘unsustainably strong’’.
The RP Data-Rismark Hedonic Home Value Index released on Tuesday showed a rise in dwelling values in every capital city in March.
The supercharged Sydney market continues to grow, recording a monthly price jump of 2.8 per cent, bringing its quarterly growth to an impressive 4.4 per cent. Melbourne has been the surprise leader of the pack in 2014, growing by 2.3 per cent in March and 5.4 per cent over the quarter.
Darwin also clocked a strong March result, growing by 3.3 per cent in March though just 2.8 per cent over the quarter.
Brisbane grew by 2.9 per cent in March (1.5 per cent over the quarter), Canberra by 2.2 per cent (2 per cent over the quarter), Adelaide by 1.4 per cent (1.2 per cent over the quarter) Hobart by 1.2 per cent (4.7 per cent over the quarter) and Perth by just 0.6 per cent (-0.6 per cent over the quarter).
Though outpaced by Melbourne, Sydney remains by far the most expensive city in the country with a median house price of $713,000 and a median unit price of $552,500.
Sydney has also grown the furthest from its previous peak – dwelling values are now 15.8 per cent higher than those recorded in late 2010.
remains $158,000 below Sydney’s, growing to $555,000 over the past quarter. Melbourne’s median apartment price is now $448,000 with total dwelling values now 4.7 per cent higher than their previous peak, also recorded in late 2010.
Senior research analyst at RP Data, Cameron Kusher, described the monthly growth as ‘‘a little bit of a surprise given that February was flat’’.
While RP Data national research director, Tim Lawless, said the February result was an ‘‘aberration’’, Rismark’s managing director, Ben Skilbeck, put the slow start to 2014 down to seasonality.
“March and September have a history of being comparatively strong seasonal months for dwelling value changes,’’ said Mr Skilbeck.
‘‘As such, there should be little surprise that, in the presence of high auction clearance rates and in the absence of any major economic changes, the March month delivered materially stronger performance than the flat February result.”
Both Mr Lawless and Mr Kusher expect price growth to slow in the latter half of this year as affordability constraints kick in.
‘‘Clearly the rate of value appreciation across the Australian housing market has been unsustainably strong over the short term,’’ said Mr Lawless.
‘‘However the national economy is seeing a great deal of benefit from the increased level of both developer and buyer confidence, which the RBA is likely to see as a positive outcome from the currently exuberant housing market conditions.’’
Capital city auction markets have already shown signs of cooling, with agents reporting fewer bidders at auctions and fewer buyers at open homes.
And with a record number of auctions scheduled in the lead up to Easter, clearance rates are expected to drop in coming weeks.
But Mr Kusher said that if the rate of growth doesn’t slow ‘‘naturally’’, the Reserve Bank is likely to step in.
‘‘If the level of capital growth in the housing market continues the likelihood of an interest rate hike increases.’’
‘‘Our view is that the next direction of rates will be a hike but probably not until later this year.’’