Business Spectator I January 2, 2014
Capital city home values rose at their fastest pace for four years in calendar 2013, according to the RP Data-Rismark Home Value Index.
The index showed home values in capital cities lifted 9.8 per cent over the 12 months to December, the largest calendar year increase since 2009, when values rose 13.7 per cent.
The increase was the fastest annual rate of growth since August 2010.
House values grew at 9.9 per cent, slightly faster than unit values, which posted nine per cent growth.
In the fourth quarter, capital city home values rose by 2.8 per cent, with 6.6 per cent growth in the second half.
RP Data said growth gathered momentum through the second half of the year.
Sydney’s property market was the strongest, with house values rising by 14.5 per cent in the city in 2013, pushing the city’s median dwelling price to $655,250.
Perth was the second best performer, with an annual growth rate of 9.9 per cent.
Home prices in both cities are currently at record highs, up 10.9 per cent and 3.6 per cent, respectively, over prior peaks.
Hobart had the weakest growth, with prices rising by just 2..2 per cent, taking the median dwelling price there to $330,000 – the most affordable of all the capital cities.
RP Data senior research analyst Cameron Kusher said low interest rates increased demand for housing.
“Despite the strongest annual value growth since 2009, the rate of growth was not that startling given the low interest rate environment and the previous successive years in which home values fell,” Mr Kusher said.
Home values fell 3.8 per cent in 2011, and a further 0.4 per cent in 2012, Mr Kusher said.
He said the main challenges for 2014 would likely be the impact of forecast unemployment growth, affordability constraints, and whether regulatory changes will be implemented to cool the near-record high levels of investor activity.