House Price Growth In Australias Capital Cities Tops Out
News Posted On: 29 August 2014
The growth in the prices of residential property in Australia’s regional capitals is topping out, with rises of just 1.7% in the second quarter of 2014. The latest figures, released by the Australian Bureau of statistics, show that while prices remain on an upward trajectory, they are reaching a peak, and not growing as fast as they were a year ago.
The Housing Industry Association, the professional body for Australia’s residential building industry, views this as a mixed blessing, emphasising that it represents a return to a more sustainable pattern of price growth.
‘Capital city residential property prices grew by 1.7% during the June 2014 quarter. While this pace was slightly faster than the March Quarter, this growth is more modest compared with what occurred during mid to late 2013,’ said HIA economist Diwa Hopkins.
During that period, residential property prices were increasing between 2% and 4% per quarter. While it’s too early to call a trend, the signals are mounting that price growth is easing back to a more sustainable pace,’ Ms. Hopkins went on.
Ms. Hopkins pointed out that annual growth reached what looked like a cyclical peak rate of 10.9% in the March 2014 quarter. This rate eased back to 10.1% in the June quarter.
Residential property prices in Sydney continue to grow the most rapidly, indicative of the city’s continued status as Australia’s most wanted city, but growth rates remain divergent across the country’s capital cities, showing how different areas of Australia are faring differently and further clouding the picture in terms of the overall trend.
‘Steady and sustainable price growth reinforces confidence in the market and is a key ingredient to achieving healthy levels of new home building activity. We expect starts to beak through 180,000 in 2014, following nearly 170,000 last year,’ Ms. Hopkins explained.
‘Continuing improvements in the supply of new homes will be important in taking some of the momentum out of house price pressures, and we may already be seeing early signs of this,’ Ms. Hopkins added.
Breaking down the figures for the year so far, it can be seen that residential property prices increased fastest in Sydney, with growth of 3.1%. Brisbane saw an increase of 1.8%, Melbourne 1.3%, Adelaide 1%, Canberra 0.8%, Darwin saw a rise of 0.7% and Hobart 0.3%. In Perth, the capital of Western Australia, Australia’s most remote province, prices actually fell 0.3% during the June quarter.
The trend across Australia looks like the most decisive factor in property prices is a city’s proximity to Sydney. That much does seem clear. Remoter areas are seeing negligible price rises or even slight falls while Sydney and Brisbane tool ahead.
But the general picture in terms of where the whole country is headed is murky, and it’s about to get murkier, as Ms. Hopkins observes that the ABS Residential Property Price Indexes may be discontinued in a drive to reduce the ABS work program. ‘There have already been significant cuts to data provision for the housing industry,’ Ms. Hopkins stated, and observed that the loss of an accurate measure of the housing industry ‘at a time when governments and businesses need more official information about economic conditions, not less,’ the loss of the ABS data ‘represents a cost to the economy, not a saving.’
The Australian housing market looks set to follow the example set by Britain or France, a ‘two nations in one’ market where the national capital sees accelerated price growth while the provinces languish. What will happen next is unclear though – and if we lose the ABS data, even more so.
Written by Les Calvert
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