CoreLogic, the realestate data company, reported that most of Australia`s urban housing prices ended at high prices in 2019, with national average house prices up 1.1% in December and 2.3% for the full year of 2019.
The nation`s average house price surged 4 percent in the three months to December, the fastest pace of house price growth in the country for three consecutive months since November 2009. Over the past year, more than five of the eight capital cities and five of the seven "major areas outside the state" have all ended the year.
Among the capital cities, Sydney and Melbourne saw the highest annual gains, with house prices in the two major cities up 5.3 per cent in a year.
Tim Lawless, head of research at CoreLogic, said that while monthly house prices were picking up fast, December`s 1.1 per cent growth rate was weaker than November`s 1.7 per cent and October`s 1.2 per cent. 」
Lawless expects the country`s house market to recover in March and rise to record highs," A rise in house prices means homeowners will become richer, which will further boost household consumption. On the downside, however, buyers`economic affordability will worsen and those who save to buy a house will suffer as house prices rise above household income growth. 」
CoreLogic expects the median house price in Sydney could pick up to more than A $1 million if prices continue to soar. A typical Sydney detached house cost A $973,664 at the end of December, compared with a median price of A $746,017 for a Sydney apartment, according to the data. The typical Melbourne detached house price is A $778,649, while the median Melbourne apartment price is A $576,475.
(Chart: No 2 Tour)
Darwin: The only state capital city where house prices fell last year
In other capital cities, Brisbane rose 0.7 per cent in December and 0.3 per cent for the year 2019. Adelaide rose 0.5 per cent in the month but fell 0.2 per cent for the year. Price fell 6.8 per cent for the year. Hobart rose 0.2 per cent for the month and 3.9 per cent for the year.
Darwin was the only state capital city in Australia where house prices fell last year, down 9.7 percent.
Sydney had the best performance in the three months to December, with house prices up 6.2 per cent and the worst performing capital city being Darwin, down 1.4 per cent.
But Darwin`s house rentals were the highest in three months, at 5.9%, and Sydney`s at 3%.
Craig James, chief economist at CommSec, said Sydney house prices had risen 66.7 per cent in a decade, compared with 53.5 per cent in Melbourne, where "wealth has hit record highs and revenues are still growing faster than consumer prices." "Many Australians lack confidence, which makes them more inclined to save money for a simple life than to splurge on more possessions. 」
A year of ups and downs
Lawless says the positive end-of-year results mask two very different periods of the year. "We`ve seen house prices in the capital cities fall by 3.8 per cent in the first six months of 2019, followed by a 7 per cent rebound in the second half of the year. House prices rebounded because of low mortgage rates at house, a relaxed assessment of borrowers" capacity, improved housing affordability and a re-enactment of property tax policy following the federal election," he said. House stocks will remain low in advertising, and prices will face further upward pressure when buyers are active. 」
While prices rebounded strongly in the second half of 2019, house prices were lower than previous highs in most parts of Australia, Lawless said.
Nationwide, the CoreLogic index peaked in October 2017. The only regions that have hit record highs are Hobart, Canberra and Tasmania.
Tapas Strickland, National Bank`s economic and marketing director, said the national rise meant prices were now 3.1 per cent lower than their 2017 record, with Melbourne 2.3 per cent lower than its peak and Sydney 6.4 per cent lower than its peak," assuming prices keep growing steadily in 2020, then house prices will surpass their previous peaks by early or mid-2020. 」
Strickland said the National Bank expects the RBA to cut rates again in February and June, which is likely to support 2020 house prices.
But he said rising house prices have not helped improve the outlook for construction, given that construction approvals are down 18.2% year-on-year and that financing for realestate developers remains tight. At the same time, population growth will remain strong, which will underpin the potential basic demand for housing in 2020 and lead to tighter housing market conditions. 」
