Median house prices spike across Australia
An exuberant economy has triggered enough buyer confidence to push median house prices close to peak levels. For the record, the median prices are trading one percent short of the peak point. Barring a few cities, the trend is visible around Australia’s spectrum. For the March Quarter, National Median house prices have risen by 1.7% from $542,463 to $551,685. The price rise is attributable to various factors.
- A sustained climate of low interest rates
- Boost of confidence in both sellers and buyers
- Australia trading green in terms of intrinsic valuation (fundamental principle)
- People looking for Real estate investment over the equity market
These factors have injected a sense of purpose in the First Home Buyers, owner-occupiers and investors alike. With growing competition amongst them, the median house prices are only expected to get a further boost.
Another aspect which needs analytical dissection is the undersupply of housing in various cities. Lesser mortgage defaults have been observed across all demography; a feature that implies greater creditworthiness amongst buyers. Also, the working class has a much higher degree of job security today. In such times, housing undersupply only means that such buyers are in a position to hunt properties aggressively and pay higher amounts for them.
Melbourne tops median housing price hike
The housing cycle, as suggested, is showing marked signs of improvement. Sydney still remains the most expensive place to live in. Its median house prices ($673,681) and Median apartment prices ($473,808) have both returned the highest figures in the country. Having said this, Melbourne has gone one up on Sydney in terms of performance. Its median prices have catapulted 3.6% above the figure for the December 2012 Quarter. One must hasten to add though that Melbourne’s prices are trading 4.2% below peak levels (about 3.2% below the national average).
Oversupply in Sydney and Brisbane
Melbourne along with Perth and Darwin has registered high unit prices in comparison to other areas where the unit prices have largely suffered. Experts believe that oversupply in Sydney and Brisbane has resulted in paucity of unit prices. After all, oversupply is known to have a much greater impact on bulk prices. It is worth adding that lifestyle preferences are also among the top reasons for housing demand.
Local economy cannot be ignored
While Macroeconomics may hold the key, the strength of local economy cannot be ignored either. This factor probably explains why Canberra and Adelaide have posted such feeble house and unit prices. The local economy is in poor shape and to add to the woes, the unemployment levels have also reached a very high bar. This has made reasonably affordable houses seem high-priced. There are those who contest that the anticipated takeover by the coalition Federal government may also be a reason for drop in house and unit prices in Canberra. The government, if it comes to power, is likely to imbibe cost-cutting measures within its immediate plan of action.
High clearance rate a sign of good times
The high degree of residential growth will keep the price movement relatively restricted. There are no hikes expected soon. The change in clearance rate (presently 69%, showing a hike of 8% over the March Quarter last year) is already a very strong signal of a positive shift ahead.