House prices in capital cities in Australia increased by 2.4% in the second quarter of 2013, taking the annual growth to 5.1% and values to a new all time high. The latest update to the Australian Bureau of Statistics House Price Index shows that house prices increased by 2.7% in Sydney, by 2.4% in Melbourne, by 1.9% in Brisbane, by 0.3% in Adelaide, by 3.4% in Perth, by 2.9% in Darwin and by 1% in Canberra although the index fell by 1% in Hobart.
The new house price index increased by 0.7% in Sydney and in Melbourne, 2% in Brisbane, 0.2% in Adelaide, 1.5% in Perth, 0.5% in Hobart and by 1.3% in Darwin although the index fell by 0.2% in Canberra. ‘It’s also worth noting these latest improvements follow results that have turned out to better than initially estimated. The ABS revised upwards annual established house price growth in the December and March quarters of 2013,’ said Diwa Hopkins, Housing Industry Association economist.
‘These price developments signal increased activity in the housing market, with lower interest rates an obvious contributor. Another likely contributor is improved confidence. While still delicately poised, confidence has mainly tracked higher in financial year 2012/13. This compares with the previous year when pessimism was quite entrenched,’ she explained.
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The capital city Project Home Price Index shows more modest developments in new home prices. These increased by 1% over the second quarter and are up by 3.9% on a year earlier. ‘This is consistent with other indicators signalling some growing momentum in new home building activity. Relative to established house prices, these are modest developments in project home prices. They don’t appear to be signalling imminent inflationary pressures in residential construction costs,’ Hopkins pointed out.
Meanwhile, a separate report shows that total seasonally adjusted new home sales in Australia increased by 3.4% in June, the fourth consecutive monthly rise. Detached house sales increased by 19.7% in Victoria, 7.1% in Western Australia, 3.9% in New South Wales, and by 0.5% in South Australia while detached house sales fell by 11% in Queensland. Detached house sales are leading the way in the longer term, up by 7.3% at the end of last financial year, but multi unit sales dropped by 17.5%.
‘Detached housing has gained momentum as non detached housing, primarily mid/high density product, has lost momentum over 2013 to date,’ said Harley Dale, chief economist of the HIA. ‘Last financial year was a tale of two halves for new home sales. The first stanza was dominated by weakening detached house sales up against stronger multi unit sales, the latter marked by an improving detached house segment occurring as the multi unit market lost momentum,’ he explained. The overall result was that new home sales fell by 4.3% in 2012/13 when compared to the 2011/12 financial year. ‘Given it was a weaker year overall for new home sales it has been very encouraging to observe upward momentum build as we moved through 2012/13,’ Dale pointed out.
He added that there is still a long way to go as new home sales volumes are 27% down on their long term average.