Despite reports of a potential slowdown in property price growth over the coming year, signs are promising that it could work out better than expected, an economist has predicted.
With two consecutive quarters of record level median house prices, Australian Property Monitors’ (APM) Quarterly Housing Report has identified that the Sydney market, in particular, has surpassed a ‘recovery’ and is now in the ‘expansionary’ phase of growth.
Sydney saw an increase of 1.6 per cent in the median house price over the March quarter (up to $673,681) and is up 4.2 per cent over the year.
Nationally, house prices rose by 1.7 per cent over the past quarter, following a 1.8 per cent rise in the December quarter.
Melbourne was the strongest performer with a 3.6 per cent increase (up to $538,922) for houses and a 2.6 per cent increase for units, seeing the best performance for the capital in three years. Brisbane also recorded growth over the quarter, of 0.5 per cent, an increase for the third quarter in a row.
“The national housing market has recorded its best start to a year since the strong market conditions of 2010,” said APM’s senior economist, Andrew Wilson.
“Buyer activity is set to increase through the remainder of 2013 driven by growing optimism and record low interest rates that have likely bottomed out, however much will depend on the performance of both the national and local economies,” Dr Wilson continued.
However, RP Data recently suggested that the growth is unlikely to continue throughout the year if historical trends are taken into account.
Nationally, APM recorded unit prices down 0.7 per cent over the quarter, despite being 0.7 per cent up over the year, with five capitals recording drops in unit prices.
Adelaide and Canberra were the only capitals to see median house prices drop over the March quarter.
"Subdued house and unit price growth in these cities reflects the struggling local economies particularly in regard to relatively high unemployment," Dr Wilson said of these results.
He added that in Hobart, despite an increase of 0.5 per cent for houses over the quarter, market conditions remain subdued. At 9.2 per cent below its previous peak, it is the 'worst performer' of all the capitals.
"A general housing market recovery is consolidating although activity levels vary between capital city markets and market segments reflecting the mixed impact of local supply and demand drivers," he said.