HOUSE prices in major capital cities have jumped by almost 20 per cent in the past year, according to the latest Australian Bureau of Statistics figures.

Houses in major capital cities have increased by 18.4% in the last year, says the ABS / File Source: Bloomberg

• City house prices up 18.4 per cent - ABS
• Figures more than double private data
• Price momentum 'slowing', says economist 

The House Price Index of eight capital cities released by the national statistician today, shows quarterly growth to June of 3.1%, and an annual increase of 18.4%.

The data shows growth of almost double that of the private sector RP Data/Rismark index released last week which showed national city dwelling values up 10.5% in the same period. 

In its data today, the ABS said Melbourne house prices had jumped more than 24 per cent over the year to June, while Sydney house prices had risen 21%.

The index covers detached residential dwellings on their own block of land regardless of age, the ABS said. The RP Data index is calculated measuring all dwelling types.

The RBA decided yesterday to leave interest rates on hold for a third straight month at 4.5%.

In its statement yesterday, the central bank noted “the upward pressure on dwelling prices appears to have abated”.

Mr Hassan said the ABS data did show a "clear slowing" in price momentum.

In a note released today ANZ economists said while growth was expected to slow further this year, prices would be supported by the underlying housing shortage and a buoyant outlook for the Australian economy.

Last week's RP Data index showed average house prices had fallen slightly after 17 months of consecutive gains, as economists agreed the market was at a turning point.

Source:  news.com.au  4 August 2010

THE dream of home ownership is slipping further out of reach of ordinary Australians as the nation faces its worst-ever housing shortage.  A national shortfall of 190,000 dwellings will widen to 466,000 by 2020, the Housing Industry Association (HIA) says, amid expectations of a rapidly growing population.

Residential developer Australand Property Group says the major constraint facing developers is a shortage of land being made available for greenfield sites and for urban infill.

"Generally it comes from a government level, how much land is being made available to fulfil those needs, whether it be at greenfields sites or urban infill."

HIA chief economist Harvey Dale says it takes an average seven to eight years for a greenfield site to reach completion, an unnecessarily long period that pushes up costs and reduces supply.

"At the end of the day, the lack of adequate, affordable land supply is at the heart of the problem," Dr Dale said.

"The number of processes a development must go through is higher now than was the case 10 years ago.

Developer Stockland says government inconsistency at all levels is adding thousands of dollars to the cost of new homes.

"We have 565 local government areas across our country, and as property developers we have almost 565 different planning standards, charges and processes to adhere to," Stockland residential chief executive Mark Hunter said.

Australand's Bob Johnston says the underlying demand for homes is quite strong and the company views that as an opportunity.

"We will see a lot of pressure come back on to affordability and we think we are well positioned to try and address those affordability issues for purchasers, whether it be through built form or the land subdivisions we do."

Mirvac says its development division expects strong demand to continue throughout 2010, signalling that investors and upgraders have returned to the market.

Investors had begun to edge out owner-occupiers, particularly first home buyers, figures released by Australian Property Monitors on Thursday show.

However, Dr Dale says Australians won't give up their dream of a detached home any time soon.

"In the here and now, consumer preference is still for a detached house. Although home and land sizes have fallen over the past 10 years."

Source:  AAP – 1 August 2010

AUSTRALIA is in a two-speed property market with strong demand in Melbourne and Sydney and uncertainty everywhere else, real estate group Ray White says.

Ray White joint chairman Brian White said the group's results for July reflected the uneven forces at work in real estate markets as the nation heads to a federal election.

Ray White said sales for July were down three per cent on the corresponding period in 2009.

"The continuing attraction for property in Melbourne and Sydney now defines what 2010 has been all about," Mr White said.

"Demand in those cities just doesn't seem to falter even though the top end properties are quieter and there is evidence of tighter bank lending requirements."

Victoria was the strongest performing state for Ray White, with sales more than 30 per cent up in July compared with the same month last year, while New South Wales reported a four per cent increase.

 Mr White said the major mining states of Western Australia and Queensland experienced a big drop off in sales.

 source:  AAP 13 August 2010

PROPERTY investors are targeting off-the-plan apartments hoping for short-term capital gain, with thousands of prospective pre-sale buyers eyeing Sydney projects.

Ray White is reporting a 6 per cent lift in investor buying as shares weaken and with the end last year of the boosted first-home buyer's grant, The Australian reported.

An Australian Housing and Urban Research Institute report this month said 80 per cent of investors buy for long-term gain, but at least half sell within five years because of cashflow problems or disappointing capital growth. One in four investors sells within 12 months.

Developers in Sydney are reporting strong demand for new residential projects following stamp duty concession by the NSW government this year.

Tim Casey of St Hilliers Group says his company has had 650 people interested in apartments at the Caritas site in inner Sydney's Forbes Street, for which marketing begins this week.

And Harry Triguboff's Meriton Apartments reports strong interest for proposed apartments at the former Seven Network site at Epping, with more than 300 applications.

"In the next decade, we might see very little growth, and if investors keep buying and thinking 'I'm going to make a killing and then move on', they're going to find themselves a little disappointed," he said.

This would be mostly the case in Melbourne, where the market had been strong, he said. In Perth, Brisbane and Adelaide, the trend had already started to occur.

Source:  The Australian 24-8-10

RISING interest rates and weaker first home buyer activity will lead to slower house price growth in 2010, an economic forecaster says. House prices will not fall though, and rents are tipped to continue to rise because of a lack of supply, BIS Shrapnel says in its Residential Property Prospects, 2010 to 2013 report.

BIS senior project manager Angie Zigomanis said first home buyer activity has dropped after the expiry of the first home owner's grant boost at the end of 2009.

Affordability has also suffered as interest rates rise off their low levels, he says.

"With interest rates quickly lifting from these emergency levels, and the current variable rate of 7.4 per cent now being close to long term trends, the recent levels of price growth cannot be maintained," Mr Zigomanis said.

Investors will replace some of the demand lost as a result of those factors, meaning house prices will continue to grow, BIS says.

More moderate interest rate movements than recent months will also aid purchaser confidence, it says.

BIS forecasts the cash rate to rise by 50 basis points in the 2010/11 financial year and by another 50 basis points in 2011/12.

"The more stable interest rate environment is expected to underpin purchaser confidence as economic conditions continue to strengthen, and should continue to push through moderate house prices rises," Mr Zigomanis said.

House price growth is likely to remain at an average in the mid-single digit percentage range over the next three years, he says.

On a capital city basis, Sydney and Perth are expected to post the strongest growth in house prices in the coming years.

Weaker demand and local economic conditions are expected to lead to more moderate price growth in Brisbane, Hobart and Canberra.

Melbourne and Darwin have already experienced very strong price rises and low affordability will limit further rises, BIS says.

For renters, the shortage of dwellings will keep pressure on rents.

"Even though overseas migration inflows are steadily easing, a deficiency of stock is still in place with dwelling construction below underlying demand," Mr Zigomanis said.

Source:  AAP  Drew Cratchley  15 June 2010