RP Data-Rismark Hedonic Index – Residential Property Market Overview

Friday 28 December, 2007

NATIONAL MEDIA RELEASE

For expanded national City-by-City report click here to view the PDF document

The Australian Property Market is largely in good shape with property prices for houses and units continuing to show consistent increases of around 12.51 per cent over year ending November 2007, but there are some exceptions particularly the Perth market where house prices fell by 0.75 per cent, according to the combined RP Data-Rismark Hedonic Index released today.

Tim Lawless, RP Data’s Residential Research Director said, “Despite three interest rate rises within twelve months, across the nation house prices increased by 11.97 per cent, while unit prices increased by 14.25 per cent.”

“We are seeing more buyers turning to units due to escalating price tags in some areas for houses. In particular, new home owners and investor buyers flocked to the affordable unit market where bargains can still be found,” he said.

Over the year ending November ’07 unit values across Australia increased by 14.25 per cent to reach a median price of $388,742 while the median price for a house is $488,000.

Mr Lawless said that while ongoing increases in property values is good news for cashed up home owners and investors, segments continuing to struggle with affordability will find it even harder to enter the property market as further interest rate rises are mooted for the early part of 2008.

Looking at the economic factors which tend to impact on the property market Dr Matthew Hardman, Head of Research with Rismark International noted that the September quarter CPI figures now show inflation of goods to be almost zero, with services running at around 6 per cent. He said a significant factor in the difference is that many goods are imported.

“If wages in countries like China increase, it is unlikely that goods inflation will continue to be low.  Coupled with demand driven by wage inflation, Australia may see higher inflation in 2008, which could well flow through to interest rate increases and a slowing of property price growth,”Dr Hardman said.

Dr Hardman noted that this does not imply that strong growth in Brisbane, Adelaide and parts of Sydney and Melbourne will evaporate. “It will slow to more sustainable levels,” he said.

He said the downside is that there may be further price falls in outer Sydney and Melbourne, the Central Coast and Illawarra regions of NSW and the southern suburbs of Perth.

Concluding, Tim Lawless said, “Even though the Sydney market is improving there is evidence of a deepening chasm between Sydney’s affluent eastern and northern suburbs compared with Sydney’s outer ring suburbs where the market is still very flat.  We are also seeing signs of this trend being experienced in Melbourne, and to a lesser extent the southern suburbs of Perth.

You will find more information on the RP Data-Rismark Indices by login on to: www.rpdata.com/indices

Further Inquiries:

Mitch Koper – Media Manager – RP Data – 041 777 1778

Tim Lawless -Director of Property Research RP Data on 0407 587 516

Dr Matthew Hardman, Head of Research – Rismark International – 0404 768 872