The outlook for housing in 2011 may be cloudy, according to surveys from the NAB and the ANZ last week, but figures for 2010 show that they enjoyed a solid rise across the country.
Figures from the Australian Bureau of Statistics and RPData Rismark showed a rise across the country of 5.8% for the year (ABS) and 4.7% (RP Data).
The ABS said that preliminary data revealed that the prices of houses in the eight capital cities rose 0.7% in the December quarter.
That was better than the downwardly revised 0.3% fall in the September quarter and much better than the market forecast of a fall of 0.1%.
The ABS said the index increased in "Sydney (+1.6%), Melbourne (+1.3%), Brisbane (+0.7%), Adelaide (+1.1%), Canberra (+1.9%) and Hobart (+1.1%), and decreased in Perth (-3.2%). There was no change in the index for Darwin."
And it said that annually, "house prices increased in Melbourne (+10.8%), Sydney (+7.4%), Canberra (+6.5%), Adelaide (+3.5%), Darwin (+1.7%), Hobart (+1.0%), and Brisbane (+0.7%), and decreased in Perth (-2.0%)".
RPData said that among the major cities, Melbourne’s median house prices rose 8.4% in 2010 and 1.1%, seasonally adjusted, in the final quarter.
Sydney’s house prices rose 6.6% for the year and 0.9% for the quarter, while Perth and Brisbane both reported quarterly and annual price falls.
Brisbane’s median house price fell 0.5% in the December quarter (before floods) and 1% for 2010 as a whole. Perth’s prices slid 1.9% in the quarter and 2.3% for the year.
RP Data’s director of research Tim Lawless believes that interest rates are likely to be the primary determinant of housing market performance over the coming year.
“The interest rate futures market is not pricing in a full rate hike until March 2012.
"While that seems optimistic, if borrowers only have to wear one rate hike between now and March 2012 Australian dwelling values have a good chance of realising higher-than-expected capital gains.
"A long-term pause in interest rates would be welcomed by all segments of the housing market. If, however, the RBA raises rates several times in 2011, we think dwelling values will struggle to obtain much forward momentum over the year.
“The experience of the housing market after the 2003 boom affords some macro guidance as to what to expect in 2011. In 2004 and 2005, capital city home values increased by just 2.3 per cent per annum after a spate of interest rate increases.
"We could see a similar outcome in 2011 depending on what the RBA decides to do”, Mr Lawless said.
The NAB said last week that Australian house prices are tipped to fall by 0.5% over the next 12 months, with small increases in Adelaide, Canberra and Sydney offset by falls in Brisbane and to a lesser extent Perth and Melbourne.
And the ANZ forecasts Australia’s home prices to remain flat this year.
The bank estimates house prices will plateau this year, at just over $550,000 on average, as rising interest rates and a strong demand for employees work themselves out in the market.
Australian house prices have jumped from about $460,000 at the beginning of the 2009 to close last year at about $550,000.
