By Nick Lenaghan
Median house prices increased by 1.9 per cent in the last three months of 2012, setting the scene for a modest recovery in many residential markets this year.
Prices rose in all capital cities in the quarter for the first time since March 2010 as revealed by median price figures compiled by Australia Property Monitors, which is owned by Fairfax Media.
The strengthening market pushed Sydney’s median house price 2 per cent higher to a record $656,415. Melbourne’s median improved 2.4 per cent to $526,281.
APM senior economist Andrew Wilson said the national rebound was expected and further improvement would vary from city to city. “It is no coincidence that the better performing housing markets in 2012 reflected better performing economies, particularly in regard to unemployment levels,” he’ said “With a rising share market and an improving international outlook, the general economic landscape and prospects .remain optimistic, which is unequivocal good news for Australia’s recovering housing markets.” While most analysts agree a recovery in the residential markets is under way the extent is contested. Figures from the RP Data Rismark index show median values fell in all capital cities except Perth and Darwin in the December quarter.
Even so, real estate transactions in January had already put some strength back into housing prices,
RP Data national research director Tim Lawless said. ”The early data for January has almost reversed the falling capital city dwelling values recorded over the final quarter of 2012 when values were down by 1.2 per cent”. he said “While housing market conditions appear to be on the path to recovery, we still need to see a further- 4.9 per cent increase in dwelling values across the five capital city aggregate index before values return to their highs of late 2010.” House prices rose this month in Sydney, Perth and Brisbane, Mr Lawless said. Melbourne house price values were expected to remain flat across January. In Adelaide, a small increase in prices was expected. A run of cuts has pushed official interest rates down to 3.0 per cent. Some analysts predict that could be slashed by as much as another 100 basis points this year. Affordability – a combination of price, income and interest rates would underpin the recovery in most markets, analysts said Paul Braddick, ANZ Banking Group head of property research, said it appeared that house prices had found a floor by the last quarter of 2012. “It. does seem the sentiment has shifted. There are reasonable signs that buyer confidence has improved” he said. “A lot of that is based on improved affordability because of the RBA cuts that we have seen to date.” Nevertheless, Mr Braddick ‘said there was reason to remain cautious. We’re not expecting prices will lift particularly strongly over the next 12 months. We’re more confident on prices in Perth and Sydney, given their recent dynamics-and given how tight those markets are” Macquarie Capital’s Rod Cornish agreed that ‘the market was stabilising most clearly in Sydney and Perth. “Both of those markets have been in a downswing for a considerable time, Perth for four t6 five years and Sydney for longer than that.” However, the top end of those markets was yet to recover he said. Mr Cornish expected prices to track sideways in Melbourne for longer, while he said Brisbane prices had not yet bottomed.