House prices rise 1.4% during March

Australian housing prices have continued to strengthen, with values rising 1.4% during the month of March and by 4.2% over the previous three months to a median price of $450,000, according to the latest RP Data-Rismark Hedonic Home Value Index.

The result comes after solid 1.7% and 1.1% gains during January and February respectively, with the latest figures showing prices have risen by 12.5% in the year to March.

The biggest increase was found in Darwin, where prices rose by 6.9% to a median of $480,000, while Melbourne, currently the country’s strongest market, wasn’t far behind with a 6% increase to $452,000. Sydney followed by 5.1% growth and a median price of $500,000.

Canberra prices rose by 3.7% to $510,080, Adelaide by 2.7% to $385,000, Brisbane by 2.4% to $439,000 and Hobart by 0.5% to $323,750. Perth values rose by the lowest amount, 0.2%, to $480,000.

Darwin recorded the highest rental yields with a gross of 5.6% for houses and 5.7% for units, while Melbourne recorded the lowest yields with a gross of 3.7% for houses and 4.2% for units.

RP Data and Rismark said in a statement the quarterly growth, which is actually 2.9% when seasonally adjusted, is pretty solid when compared to the three previous quarters. In the previous three months, the firms recorded 3.2% growth, with two quarters of 2.9% growth in the previous six months.

Christopher Joye, Rismark chief executive, said in a statement the residential housing market has remained strong despite continued interest rate hikes, which some property experts have said will soon curb demand from first home buyers.

“The housing recovery has remained surprisingly resilient in the face of sustained interest rate hikes. The lively capital growth observed in the major cities runs against the grain of relatively anaemic housing finance flows.”

“This implies that underlying demand- and supply-side fundamentals are driving Australia’s housing rebound, as opposed to simply credit.”

Additionally, RP Data research director Tim Lawless said that while the industry has recorded significant growth, moderation is expected this year as mortgage finance becomes more difficult to acquire with higher interest rates. “Over the longer-term home values should be expected to track disposable incomes.”

The figures also pointed out a performance gap between capital and regional markets. The report said this gap was “most noticeable in Victoria where Melbourne home values gained 19% over the last 12 months while regional markets increased by a comparatively weak 5.9%”.

“Capital city markets represent just 0.5% of the national land mass but account of around 60% of home sales,” Lawless said. “The bulk of Australia’s population growth is concentrated in the capital cities, in turn driving housing demand.”