Well axe, I agree in general with what u have said but the unusual way of propping property price in Oz is coming to an end.... Will talk again by mid of next year and we will know whether property price will continue to hold up or face a major correction...
Yo Kingat33, we are not far away (5mths left) to conclude the findings.. Resource boom will generate jobs and ppl will start their shopping spree. Do mark my words, soon the boom will hit the rest of the States.. the min property growth for 2010 is estimated at 10% !! .. A snapshot for you reveiw:
http://www.domain.com.au/Public/Art...ne=House prices to take a breather after leap
House prices to take a breather after leap
Date: February 1, 2010
Publication: Sydney Morning Herald (subscribe)
House prices are likely to soften in early 2010 and pick up later in the year despite the big leap recorded in a house price index, economists say.
The Australian house price index rose 5.2 per cent in the December quarter, the Australian Bureau of Statistics said today. This compares with an upwardly revised 4.4 per cent in the September quarter.
In the year to December, the house price index rose 13.6 per cent.
The median market forecast was for the house price index to have risen 3.5 per cent in the December quarter, for year on year rise of 11 per cent.
Softness ahead
However, CommSec economist Craig James said the ABS data were not considered as reliable as other data series.
‘‘At face value it looks like it’s going gangbusters but the RP Data Rismark series rose by 2.1 per cent in the quarter and 11.1 per cent over the year, so I think what this data does is overstate the true situation,’’ he said. Mr James said the ABS data could get quite distorted by the composition.
‘‘It is clear that house prices picked up pace through 2009, but certainly the RP Data Rismark series which is done on a monthly basis showed that a degree of softness was coming in later in the year with the expiry of the government’s first home owners boost.’’
‘‘I think we are going to see further softening in house prices in the market in the first couple of months of 2010.’’
Higher interest rates and the removal of the first home owners boost would lead to a slight ‘‘hangover’’.
But later in the year, the strength of the jobs market and strong population growth would lead to annual house price growth of about eight to 10 per cent this year, he said.
‘‘To some extent a rise in the mortgage rate over the year will be serving to constrain prices, but fundamentally we haven’t been building enough homes in relation to our rising population and that will correct over 2010.’’
Melbourne leads rise
Among the capital cities,
[COLOR="_______"]prices grew fastest in Melbourne which posted a quarterly rise of 6.8 per cent and an annual rise of 19.7 per cent[/COLOR]. Sydney house prices grew 5 per cent in the last quarter and 12.8 per cent over the year, while Perth posted a 5.7 per cent quarterly rise and an 11.5 per cent annual jump.
Adelaide had the smallest gains, with 2.1 per cent for the quarter and 5.1 per cent for the year. In Brisbane prices advanced 3. 8 per cent in the December quarter and 10.9 per cent over the year.
Rates move looms
ICAP economist Adam Carr said the data suggested the Reserve Bank of Australia was more likely to hike interest rates by 25 basis points on when the board meets on tomorrow.
But he said the surge in house prices pointed to a housing shortage that was quickly becoming a national crisis.
"This is a market begging for more construction," he said.
"We have a housing shortage.
"Our population is concentrated in a handful of cities.
"We don’t have a middle America where we can build cities, etcetera.
"We just have desert.
"We have problems and it’s urgent that the federal government address it because the state government’s clearly aren’t doing their job."
Mr Carr said that should the RBA lift the interest rate by 25 basis points 4 per cent, the cash rate would still be stimulatory.
"The RBA will obviously be looking at house price growth quite closely and the associated construction growth.
"We already have a pretty decent idea about where they sit about house price growth along side the credit growth in the absence of construction.
"It’s not a good combination.
"So I suspect it would add to the case for the RBA to hike."
National Australia Bank senior economist David de Garis said the RBA would take the cash rate to 4 per cent, but its decision would be finely balanced.
He said a central bank would hold off on further rate rises for a few months, with a private sector survey showing that house prices might have cooled in December.
Late last week the RP Data-Rismark Hedonic Home Value Index showed home values fell by 0.3 per cent in December.
The Survey said the slowdown stemmed from a seasonal summer slowdown, rising interest rates and phasing out of the enhanced first home buyers grant which ended in December.
"Maybe the RP data is showing that the rate rises are just starting to cool the market a touch," Mr de Garis said.
"It’s just one month, but that series has been showing rises of one or more per cent a month and it levelled off in December."
