Melbourne lags nation in housing price recovery
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.
Frequently Asked Questions about this Article…
Yes — according to Australian Property Monitors (APM) the national median house price rose 2.1% in 2012, reversing much of the 3.6% decline in 2011. APM said solid fourth-quarter growth (1.9%) helped drive the turnaround, but recovery is uneven across cities.
Melbourne posted only a 0.5% annual rise to an average house price of $526,300. APM described Melbourne as more flat‑lining compared with Sydney and Perth—its year was weak early on and the December-quarter strength was driven mainly by higher‑end ($1 million+) homes rather than broad mid‑market growth.
Sydney and Perth were the main drivers of the APM national rise. Sydney house prices rose 3.4% to an average $656,400 (units up 5.6% to $475,300), while Perth house prices increased 6.1% to $560,800. Analysts also noted strong growth in Darwin.
A “two‑speed” market means some cities are recording strong annual growth while others are weak or growing below inflation. MacroBusiness economist Leith van Onselen highlighted Darwin and Perth as strong performers, while many other markets saw modest or negative annual movement.
APM’s senior economist Andrew Wilson said interest rate cuts helped underpin price growth, but the full benefit was being partly offset by the rising cost of living — meaning rate cuts weren’t the only factor affecting prices.
No — different data providers use different methodologies. While APM reported a national rise, RP Data‑Rismark recorded a national dwelling value decline of 1.2% in the December quarter and a 0.4% drop over the year, illustrating contrasting readings depending on the index used.
It’s a key unknown. Leith van Onselen noted the October expiry of first home buyer grants on pre‑existing dwellings in Sydney and Brisbane could influence prices, though the article doesn’t provide a definitive outcome.
The middle market (about $500,000 to $600,000) was largely responsible for pushing Sydney prices up. APM said Sydney has now surpassed the peak it hit in June 2011, effectively wiping out losses from the two‑year downturn and indicating a definitive recovery.
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