The Australian Bureau of Statistics has released its property price index for the December quarter which shows that prices increased in the capital cities by 1.9 per cent from the previous quarter and 6.8 per cent from the same period in the previous year. The total value of residential properties in Australia is now $5.4 trillion, up $124,445 million from the previous quarter.
The mean price of properties rose by $10,900 to $571,500. Regionally, Sydney had the largest price growth, up 3.4 per cent in the quarter and 12.2 per cent from the same period in 2013. Next came Brisbane (1.4 per cent quarterly rise, 5.3 per cent from the previous year); Melbourne (1.3/4.5); Hobart (1.0/2.2); Adelaide (0.8/2.5); Perth (0.3/1.2); and Canberra (0.2/1.7). Darwin was the only capital to show a quarterly decline falling 0.6 per cent from the previous period and rising just 0.8 per cent from the December 2013 period.
Shane Garrett, senior economist from the Housing Industry Association says the figures show that the market is now at sustainable levels: “In inflation-adjusted terms, the rate of home price growth is now around 5 per cent annually,” Shane Garrett explained. “This is exactly the kind of home price growth that prevails over the long term. Australian home price growth is now striking the right balance.”
Source: ABS, HIA
NAB announces lower fixed rates
With many of the major lenders having announced cuts to their variable home loan rates there is also some movement on fixed rate mortgages. The National Australia Bank has announced that its one-to-five year fixed rate loans have been cut with immediate effect to record lows. Its one, two, three and five-year package fixed home loan rates have been reduced by 0.30 per cent, 0.25 per cent, 0.25 per cent and 0.40 per cent respectively.
Rate cut could fuel housing bubble
Economists from HSBC fear that the interest rate cut could lead to a housing bubble, especially in Sydney. Paul Bloxham and Daniel Smith say in a new report that they expect house prices to continue to grow nationally by 7 to 8 per cent, ahead of household incomes, and that in the NSW capital there could be a rise of up to 10 per cent this year. The economists warn that the rapid rise over the last 2 ½ years (23 per cent nationally and 33 per cent in Sydney) could be followed by a rapid fall in prices when the Reserve Bank of Australia eventually increases interest rates.
Source: Sky News
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