Financial year produces property price rises

Financial year produces property price rises

Posted on Wednesday, July 02 2014 at 4:27 PM

Australia’s capital city dwelling values ended the 2014 financial year up 10.1 per cent, according to the RP Data Rismark Hedonic Home Value Index.

Sydney and Melbourne saw the largest gains, reflecting 15.4 per cent
and 9.4 per cent respectively.

Brisbane had the third strongest year at seven per cent, while Darwin
at 5.7 per cent and Perth at 5.2 per cent filled out the top five spots.

On a monthly basis, RP Data reports a 1.4 per cent increase in capital
city house values with all cities recording a rise except Adelaide and Darwin.

Tim Lawless, a
research director at RP Data, says this has partially reversed
last month’s 1.9 per cent fall and reflects an overall decline of 0.2 per cent in
dwelling values during the June quarter.

Lawless says this softening is a reaction to growth
earlier this year.

“The recent reduction in capital gains is likely a
correction from the strong market conditions reported over the first quarter of
the year.”

Lawless believes long-term trends are the best
indication of performance.

“It (the trend) shows that the quarterly rate of growth
peaked across the Australian housing market in August last year at four per

“Since that time the rate of capital gain has generally
trended towards a more sustainable level.”

Combining rental returns with capital gains produces a
staggering 20.2 per cent total return for Sydney investors over the course of
the year.

Melbourne, Darwin and Brisbane have also recorded a
total gross return in excess of 12 per cent during the period.

Lawless says low interest rates will continue to
support property values.

“What is more likely is that natural affordability
constraints will start to dent buyer demand, as will the low rental yield
scenario’s that are very much evident across the largest capital cities of
Melbourne and Sydney.”

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