RP Data-Rismark Hedonic Index – Residential Property Market Overview

Thursday 31 January, 2008

NATIONAL MEDIA RELEASE

For expanded national report click here to view the PDF document

Australia’s powerful property market is set for more solid growth based on the results of the combined RP Data/Rismark Hedonic Indices report released today.

As forecasted by RP Data and Rismark, the Australian residential property market delivered“spectacular” returns in 2007 with capital growth of more than 13 per cent, despite six interest rate rises over the last 2.5 years, and the uncertainty caused by the US sub-prime crisis.

RP Data and Rismark expects that the residential market will continue to deliver strong returns for investors through 2008 and significantly outperform other asset classes.

Christopher Joye, CEO of Rismark International said, “Allocations to residential property will therefore provide super funds and other institutional investors with very attractive diversification opportunities to offset the losses they realise in other sectors.”

“The residential property market’s recovery in 2007, which should continue during 2008, is a function of a number of factors, including immigration, strong economic growth, relatively low “real” interest rates, and significant housing supply constraints,” Mr Joye said.

The report highlighted the fact that property in Australian capital cities grew by 13.08 per cent, outperforming the ASX
200 which grew at 11.8 per cent.

According to RP Data National Research Director Tim Lawless, across Australia houses have appreciated by 11.90 per cent
on average over the twelve months to December 2007, while units appreciated by an average of 16.87 per cent over the
same period. The average Australian property owner has gained just over $50,000 in capital appreciation during 2007.
Adelaide continued to be the strongest performing city where over the year ending December 2007, house values
increased by 26.09 per cent and unit values increased by 32.58 per cent. In dollar values this represents an average gain of
$82,000 for Adelaide property owners. Despite this exceptional level of growth, Adelaide houses still have the least
expensive price tag of any capital city with the median value now at $406,270.

Unit values continue to increase at a faster rate than house values during 2007. Nationally, unit values increased by 16.87
per cent compared with house values increasing at the rate of 11.9 per cent over the calendar year.

Mr Lawless said, “Units and townhomes are increasing in popularity due to their more affordable price points. Many
potential house buyers are blocked from the market due to affordability constraints. These buyers are looking towards
higher density living in order to buy into the market.

“In addition, developers are catering to the unit market, by providing larger floor areas, open plan designs, a blend of
indoor and outdoor living and integrating high end fixtures and fittings,” he said.

Looking at the west coast of Australia, the Perth market continues to lose its shine. Over the December quarter Perth
house prices slipped backwards by 3.34 per cent. However, while houses values have waned, unit values remained steady
increasing by 7.55 per cent over the year.

Mr Lawless said if population growth is a sound indicator of a market’s potential, the Perth market will experience a turn
around. As a whole, Western Australia is enjoying the highest rate of population growth in the nation which is fuelling
demand for housing. Affordability appears to be the biggest issue holding back the market.

Looking at rental yields, the highest returns on houses are being achieved within the Darwin market. The average rental yield on a house at Darwin is 5.27 per cent which is now 1.3% higher than the national average. Unit yields are also very strong in Darwin, averaging 6.14 per cent. However, Canberra is recording the strongest yields for unit rentals, achieving an average gross rental yield of 6.28 per cent. Perth is recording the lowest rental yields at 3.46 per cent for houses, and 4.01 per cent for units.

Rental yields are likely to continue to improve nationally as demand for rental accommodation is heavily outweighed by
supply.

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