How a pool helps your property
Stephen Nicholls looks at the benefits of a pool in the property market.
Home prices rose across Australia in the three months to September, as investors upgraded to more expensive properties.
The adjusted median price on houses in capital cities rose 3.7 per cent in the September quarter, while prices for units jumped 3.4 per cent, according to Australian Property Monitors.
"The extraordinary recovery at the upper end of the market experienced in June in most major capitals has now spread to the rest of the country," said APM economist Matthew Bell.
"Another quarter of improving employment results and the share market rising by 20 per cent has meant that buyers are stepping into the oversold top end of the market to purchase properties at prices still below their late 2007 highs," he said.
Owners who sold properties while the full First Home Owner Grant was offered have used their earnings to buy more expensive homes and units, Mr Bell said. That in turn has put more pressure on the upper end of the market.
The full grant ran from October 2008 to September of 2009 and will continue in a reduced form until the end of the year. More recently, official data from the Australian Bureau of Statistics showed an 8 per cent rise in investment loans in August.
Melbourne's adjusted median house price jumped the most in the nation, rising 6.1 per cent to $487,246. Sydney's house prices gained 3.6 per cent $569,061, while Perth's increased only 1.7 per cent to $494,409, APM data showed. APM is owned by Fairfax, publisher of this site.
So far in 2009, home prices across Australia have increased 7.1 per cent, boosted by a shortage of supply, low interest rates and the expansion of the First Home Owners Buyers grant.
The local economy's growth has defied expectations, measuring only one quarter of contraction while the financial crisis sapped economies elsewhere such as the US and Europe.
Rates risk
Interest rates are on the rise with the Reserve Bank expected to increase its cash rate to 3.5 per cent, following a rise to 3.25 per cent earlier this month.
Mr Bell said rising interest rates was the main risk to home prices.
''While the explosive growth seen in the upper end of the market is expected to slow as prices reach and exceed their late 2007 highs, moderate to strong growth is expected across the market as a whole for the remainder of 2009 and 2010.
''The question as to whether this growth can be sustained throughout 2010 depends on how quickly mortgage rates rise in the next six months,'' he said.
Brisbane house prices rose 1 per cent to $430,868, while Hobart's jumped 5.4 per cent to $311,366. In Canberra prices increased 4.8 per cent in the quarter to $511,820 and in Adelaide they increased 3.3 per cent to $421,765.
Home prices have jumped 28.1 per cent from 2003-04 to the June quarter 2009 alone, official data shows.
Affordability
However, the soaring prices have put home ownership out of reach for many.
The Housing Industry Association and Commonwealth Bank first home buyer affordability index, released last week, dropped 3.3 per cent in the September quarter, following a 5 per cent slide in the June quarter.
''Many of my friends and I, just hitting forty, missed the boat to buy in Sydney,'' said Doonside, NSW-resident Natalie Oliver.
''We graduated, worked in ordinary paying jobs, and some in the charity sector, happy to accept that NGOs (non-governmental organisations) pay less than the average wage.''
''But for the past ten years (after paying off HECS) we find that it is never the right time to enter the housing market.''
Ms Oliver said that even if she moved to Newcastle or Wollongong, based on her earnings, she could still not afford to buy.
czappone@fairfax.com.au
BusinessDay
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