Aussie house price growth lacklustre in 2010
Australian property prices increased marginally in the final quarter of 2010 with a new report revealing that values peaked in May 2010 before finishing the year virtually at standstill.
Dwelling values rose by just 0.4 per cent in the December quarter of 2010, and 4.7 per cent over the year, RP Data and Rismark’s Hedonic Home Value Index revealed today.
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Sydney and Melbourne were the strongest capital city performers over the course of the year recording annual growth of 6.6 and 8.4 per cent respectively.
Brisbane and Perth were the worst performers, finishing up -2.3 and -1.0 per cent down respectively.
In the last three months of the year just 0.4 per cent growth was recorded for the capital cities index with Melbourne coming out on top with 1.1 per cent growth and Perth recording the worst performance, with a decline in values of 1.9 per cent.
RP Data’s director of research Tim Lawless said interest rates were the key reason for the trough in values and would be the key determinant of performance in 2011.
“The RBA’s four interest rate hikes in 2010, which were topped up by a fifth via the banks, conspired to snuffle out capital growth during the remainder of the year.”
Several subsequent rises in 2011 would see dwelling values “struggle to obtain much forward momentum, “Mr Lawless said.
While flat-lining values may not be welcomed by some existing property owners, they do imply attractive buying opportunities with Mr Lawless pointing to further improvements in buyer leverage in 2011, subject to rate movements.
Furthermore, Mr Lawless said the results of the index pointed to improving fundamentals in the Australian market.
“The flat lining in Australian home values since early 2010 is an encouraging sign from a valuation and fundamentals perspective. We are seeing rapidly rising household disposable incomes combined with no price growth over an extended period of time,” he said.
