Housing market healthy, but stabilising

8 March 2005

December quarter 2004 housing data released by the Real Estate Institute of Australia (REIA) today shows that growth in house prices has stabilised.

"Interest rate rises in late 2003 served to dampen the market. The March 2005 interest rate rise, together with the possibility of another rise soon, can also be expected to impact on prices. However Australians understand and have confidence in property. Australians in general remain committed to the housing sector, both for their own homes and for investment," says REIA President, Ian Wells.

The quarterly Australian weighted average median house price reported in the December quarter 2004 edition of Mortgage Choice / REIA Real Estate Market Facts was $371,853 in December 2004, up from the September 2004 price of $364,803, and the December 2003 price of $362,734.

Median house prices declined 0.7 % to $471,500 in Sydney in the December quarter. Median house price growth was recorded in Darwin (0.2 % to $260,000); Adelaide (2.7% to $270,000); Canberra (2.9% to $350,000); Brisbane (3.0% to $309,000); Hobart (3.5% to $265,000); Melbourne (5.2% to $382,000) and Perth (5.5% to $267,000).

For the year to December 2004, falls were recorded in Melbourne (-1.2%), Sydney (-1.8%) and Canberra (-2.8%). Hobart experienced the largest growth (17.1%), followed by Darwin (13.0%), Adelaide (10.7%), Perth (8.1%) and Brisbane (3.7%).

‘Median prices for other dwellings have flattened substantially compared with the high rates of growth experienced in 2003,’ says Ian Wells.

In the other dwellings sector (flats, units, townhouses) in the December quarter, falls were recorded in Canberra (-1.1% to $275,000) and Darwin (-2.8% to $175,000).

Increases in median prices for other dwellings were recorded in Sydney (1.4% to $360,000), Brisbane (3.5% to $238,000), Melbourne (4.1% to $302,000), Hobart (6.6% to $208,000), Perth (7.5% to $215,000), and Adelaide (13.7% to $216,000).

For the year to December 2004, median prices for other dwellings fell in Canberra
(-3.3%) and remained flat in Sydney (0.0% change). Prices increased in Melbourne (2.4%), Brisbane (6.3%), Darwin (9.4%), Perth (13.8%), Adelaide (16.8%) and Hobart (26.8%).

"Interest rates will be the most important factor in determining where the market will move in the coming months," says Ian Wells.

"There is already evidence of substantially reduced investor activity, particularly in the market for other dwellings. This month’s interest rate rise will impact prices in the coming months. We call on the RBA to recognise the changing conditions in the housing market and to allow time for the impact of the March rate rise to be measured, as it makes further deliberations about interest rates."