australia property prices have grown massively but by how much exactly
News Posted On: 03 November 2009
There is currently a lot of debate over Australia property prices. The 3rd quarter data released by the Australian Bureau of Statistics shows that residential property prices rose 4.2% in the 3rd quarter. However, The RP Data-Rismark National Home Value Index, the one which the Central Bank relies on shows a growth of 2.5%.
The Australian Central Bank relies on the latter, because the former does not include apartment sales, and is compiled in a different way. According to Craig James of CommSec, recently quoted in the press, it is also because the RP index is showing much more conservative growth figures.
"The RP Data are substantially lower than the Bureau of Statistics figures and they are seen as a better indication of what's happening in terms of house prices," he said.
But this is not true. The ABS index says prices have grown 7.2% this year, which the RP Data-Rismark index is showing a growth of 8.1% in the first nine months of the year.
However, the RP index is still likely to be the most accurate, because it confirms what we were expecting based on market realities.
Australian property prices have been rising because of the record low interest rates, but the government has recently raised interest rates, and moved to slow price growth and stop the possible formation of a bubble. So, with that knowledge one would expect growth to slow.
And that is exactly what the RP index shows. In August the index recorded the record growth of 2%, compared to 0.1% in September.
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