Australian Property Market Update & Research November 2013

Australian Property Market Weekly Update – 11 November 2013

11 NOVEMBER 2013 |  

Australian Property Market Gauge

Percentage growth over the last 3 months x 4
chart_9

Weekly Market Snapshot

With all the talk of Sydney and Melbourne booming it is nice to report for a change that Brisbane, Adelaide and Perth all out-performed the larger two cities this week. Melbourne’s bumpy growth continues with it declining 0.21% last week and Sydney registered relatively subdued growth of 0.05% for the week to 11 November 2013.

Of note this week was Residex publishing their quarterly update which in summary reported sub 7% growth for both units and houses in all markets, except for Sydney houses which grew 10.8% over the 12 months to 30 Sept 2013. The unit growth rates were particularly down beat with only Perth and Darwin unit prices increasing more than 4%; Sydney units increased broadly inline with inflation at 3.3% and Melbourne units grew 1.6%.

Due to relatively strong employment numbers and a potential further reduction in the cash rate John Edwards (Residex Founder) concludes that for those interested in investing in property “are looking at a period of reasonable growth and … an attractive and reducing risk profile”.

For a somewhat contrasting view Chris Joye in the weekend’s AFR raised his concern over how expensive the Australian property market has become and that this “should give all of us pause”. He states that Australia’s median dwelling price to disposable incomes per household was 2.6x in 1990 and it is now approximately 4.1x, near it’s all time high of 4.24x in June 2010. “With the risk that mortgage rates need to increase by 50 per cent off their lows of about 5 per cent to get back to the more “normal” levels … the potential for a future correction is significant.”

Market Gauge by City

Percentage growth over the last 3 months x 4
chart2(1)
Source: RP Data

Annual Property Price Growth by City

chart18

In table format:

chart2(1)1

Source: RP Data Click here to understand the limitations to the quality and timeliness of Australian real estate data.

Source: RPData, Monday 11 November 2013. 

Market Commentator Insight

  • Leith van Onselen discusses the Weekly RP Data Australian house price update. “Over the past 12 months, values have risen by 8.19% at the 5-city level, again with all major markets experiencing increase.” Click here to read more.
  • Chris Joye writes, “Two markets are at risk of significant overvaluation – Australia’s $4 trillion housing sector and the $405 billion big banks that furnish most of the funding we use to buy homes.” Click here to read more.
  • John Edwards believes that there’s No Housing Bubble on the Horizon. “I believe that while the economy is doing relatively well and sentiment is improving, it still needs a further boost as interest rate reductions have not stimulated business activity sufficiently. I think there will be a further interest rate reduction, which will probably be the last in the cycle, in the order of 0.25%.” Click here to read more.
  • Dr. Andrew Wilson says that Sydney’s record-breaking spring auction market shows no sign of waning. “Low interest rates have certainly assisted in energising the Sydney housing market this year and although signs remain mixed over the performance of the national economy, the Reserve Bank as expected decided to leave rates on hold for the third month in a row at its regular Melbourne Cup Day meeting. A rate cut however remains a possibility, particularly if unemployment continues to rise with the New South Wales October rate now up to an uncomfortable 5.9 percent.” Clickhere to read more.

Latest Official Australian Property Prices

The below table outlines the latest property prices released by Australia’s major real estate data providers. See our in-depth article for an explanation of the various indices and their pros & cons. The table has been updated to include the Residex capital city house and unit price indices for the September quarter of 2013 announced last Thursday (7/11/2013).

Capture

  • Caution: the average mixes methodologies and sometimes time periods
  • RPData: Monthly indices. Australia = 5 capital city aggregate
  • APM: Monthly data except for Adelaide, Darwin & Hobart which are updated quarterly (Mar,Jun,Sep,Dec)
  • ABS: publishes results quarterly, and only for houses.

    Iphone photos 17-10-13 047
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