After racking up eye-popping gains over the past 11 months, Australia's residential property markets ended the year virtually flat according to the latest figures from RP Data.
Home values eased by 0.3% in the month of December, dragged down by rising rates and the fading first homebuyers. During the 12 months to December, national dwelling values rose by 11.5%.
Darwin continued to outperform the rest of Australia's capital cities, racking up a whopping 16.6% growth in value to $455,000 during the 2009 calendar year. Melbourne followed closely at 15.6% gain to $460,000, while Sydney dwellings climbed by 11.4% to $510,000. Adelaide was the weakest market with just 6.2% growth in value over the same period.
Tim Lawless, rpdata.com's head of research said the market drivers changed considerably over the year.
"The strongest gains recorded early in the year were driven by the first homebuyers. Over the second and third quarters, it was upgraders in the middle and top ends of the market that generated the strongest gains. The top 20% of Australia's most expensive postcodes increased in value by 9.5% over the last three quarters of the year compared to 4.1% growth in the cheapest 20% of the postcodes," he said.
Christopher Joye, managing director of Rismark International added that the housing market will cool as mortgage rates normalise back to 7-8% levels. "This implies that capital growth rates will fall back to single digit levels consistent with expected change in the incomes of prospective buyers," he said. "It pays to remember that the price of Australian homes is only around 4.1 times disposable household incomes, which has been unchanged since September 2003. This tells us that over the last six years Australian house price have very closely tracked changes in household incomes. Contrary to popular myth, Australia's house price-to-income ratio is not unusually high, nor has it risen in recent times" Joye said.