Australian housing prices have jumped 2.8% in the four months to April nearly erasing all declines recorded during the 2008 calendar year, according to a new industry report.
The RP-Data/Rismark report shows that all capital cities recorded gains in housing markets, with Darwin leading the pack at 5.3%. Melbourne and Sydney both followed with 4.4% and 3.9% increases respectively.
The report also shows that units recorded higher increases than houses, recording a 3.3% increase in value over the four months.
“Our analysis demonstrates that home values are rising in around 80% of all suburbs with only the top 20 per cent of suburbs ranked by price suffering material falls,” Rismark international managing director Christopher Joye said in a statement.
RP Data research director Tim Lawless also said that higher prices for units are due to a number of factors.
“Comparing median house and unit values nationally, the price gap between is just over $90,000, so the value proposition of a unit is very compelling. Additionally, units are generally located closer to the city and along transport spines, which is very appealing to many Gen Y and Gen X buyers,” he said.
Lawless also said the growth in prices may be due to simultaneous declines in rental prices, but that current rent levels may not stay so low for long.
“We are now seeing growth rates for weekly rents start to level due to decreasing rental affordability, which is causing many renters to consider buying a home instead of renting.
“Gross rental yields are likely to peak over the coming months suggesting that now is probably the best time for investors to roll up their sleeves and become active,” he said.
Joye dismissed claims that the rise in housing prices is creating an artificial bubble, particularly in the first home owner’s market, that will result in another dramatic drop in value.
“While first-time buyer activity has certainly supported the market, people forget that 70-75% of home buyers are not first timers. Also, lending standards are more conservative today than they have been for over 15 years with maximum borrowing ratios being consistently reduced.”