Australia’s property market shows no sign in slowing down having just posted its biggest annual property price gain in four years. Record low interest rates have stirred up buying appetite and many are predicting prices will continue to hear higher over 2014.
Dismissing talk of a bubble BIS Shrapnel predicted last year Sydney house prices could climb by 19 per cent over the next three years on the back of under-supply and strong demand. The property forecaster also tipped Perth house prices could rise 17 per cent and Brisbane prices could gain 16 per cent but said price growth in Melbourne, Adelaide and Hobart could be more subdued.
It is certainly a hot market as the latest figures confirm - Australian property prices rose at the fastest pace in four years over 2013. It was the biggest annual gain since 2009 when values jumped 13.7 per cent. RP Data-Rismark’s Home Value Index shows home values in capital cities rose 9.8 per cent over 2013 with the median dwelling price coming in at $540,000. The gains were driven by Sydney’s property market and on the back of record low interest rates.
2013 Australian home values
Sydney up 14.5 per cent to $655,250
Perth up 9.9 per cent to $520,000
Melbourne up 8.5 per cent to $563,000
Brisbane up 5.1 per cent to $445,250
Canberra up 3.5 per cent to $530,000
Darwin up 3.3 per cent to $540,000
Adelaide up 2.8 per cent to $386,000
Hobart up 2.2 per cent to $330,000
Weaker demand for credit could give the Reserve Bank of Australia (RBA) ammunition to hold the key cash rate steady in 2014. The RBA has shown total credit in the economy grew at 3.3 per cent in the year to November 2013. Demand for housing credit rose 0.5 per cent in November 2013 for an annual growth rate of 5.1 per cent. Commenting on the figures, CommSec economist Savanth Sebastian said the demand for overall credit looks particularly benign relative to the atmospherics around the housing markets.
Commentary
FNN speaks to RP Data Head of Corporate Affairs, Craig MacKenzie about how Australia property performed over 2013:
“Certainly markets like Hobart underperformed but that was probably expected - They had some issues down there in terms of the economic drivers and population growth. Underperformers, Adelaide probably possibly underperformed, although came back towards the end of the year. But I think the rest of the market performed generally as expected.
Potentially surprising was the Brisbane market. We saw some good performance return to South East Queensland towards the later part of 2013. That market has been fairly soft for a period of time and it probably did rebound more strongly than we anticipated and more quickly that we anticipated.”
Commercial property sector
REA Group Limited
(ASX:REA) was the second best performing stock in the key benchmark S&P/ASX 200 in 2013 with the online property advertiser jumping about 108 per cent.
Across the ASX All Ordinaries index iProperty Group Limited
(ASX:IPP) made the top ten best performers. The operator of online real estate property portals advanced about 125 per cent over 2013.
The worst performing stock of 2012 experienced a remarkable turnaround in 2013. Property and investment company Aveo Group
(ASX:AOG), formally FKP Property Group
(ASX:FKP), plunged 57 per cent over 2012 but jumped 88 per cent over 2013 after refining its strategy and changing its name.
