Melbourne lags nation in housing price recovery
AUSTRALIA'S troubled housing market appears to be in the midst of a recovery, with new figures showing prices rose across all the capital cities at the end of last year.
Australian Property Monitors reports that the national median house price rose 2.1 per cent in 2012, reversing much of the 3.6-percentage-point decline of 2011.
The Fairfax-owned analyst group said the positive results were driven largely by a "solid" growth performance of 1.9 per cent in the fourth quarter.
"The result will add confidence that a recovery is under way but it's important to note that the capital city markets aren't moving as a monolith," said APM senior economist Andrew Wilson.
"Even though we do look at the national figure - and it has risen - it really reflects a rising Sydney and Perth market but a flat-lining Melbourne market."
In Sydney, "resilient" conditions raised house prices by 3.4 per cent to hit a record average of $656,400. Unit prices rose 5.6 per cent to a new high at an average $475,300.
"Sydney has now surpassed the peak it hit in June 2011, wiping out the losses that have been experienced over the two-year downturn. The market has definitively recovered," Dr Wilson said.
The middle part of the market ($500,000 to $600,000) has been responsible for pushing up prices in Sydney, but remains subdued in Melbourne, where $1 million-plus homes have driven the growth.
Melbourne house prices posted only a minor rise of 0.5 per cent to $526,300, buoyed by a strong close in the fourth quarter after a weak run earlier in the year.
The unit market posted its first quarterly growth in a year, although prices were still down 2 per cent over 2012 and the number of sales dropped sharply.
The flow-on effects from the mining boom helped Perth top the list of the best performing markets in the country after its house prices rose 6.1 per cent to $560,800.
Dr Wilson said that while interest rate cuts were underpinning price growth, the full effect of the savings was being offset by the rising cost of living.
Other analysts confirm that Australia is experiencing a "two-speed" housing market.
MacroBusiness economist Leith van Onselen said Darwin and Perth were recording strong annual house price growth, while Sydney's performance had outpaced inflation.
"Elsewhere, house price growth remained fairly weak, with values either falling over the year, or growing at rates below inflation," he said.
Mr van Onselen also noted that Melbourne's strong December-quarter performance was driven by a downward revision in APM's September quarter figures.
"A key unknown in the year ahead is whether the October expiry of first home buyers' grants on pre-existing dwellings in Sydney and Brisbane will affect house prices," he said.
APM's figures also differ sharply from the findings of other data providers who measure house price movements using a different methodology. RP Data-Rismark reports the national dwelling value declined 1.2 per cent in the December quarter and 0.4 per cent over the year.