A new survey has shown home prices grew more strongly than expected in January, giving the Reserve Bank of Australia further ammunition to raise interest rates.

However, annual house price growth should moderate to single-digits in 2010 from the low to mid teen levels last year.

Across all capital cities home prices rose an average 1.8 per cent in January and 11.8 per cent over the previous 12 months, the RP Data-Rismark Hedonic Home Value Index showed.

“The data was certainly stronger than we expected,” Rismark International managing director Christopher Joye said.

“It is based on a typically seasonally small sample of sales for January, so one needs to exercise caution,” he said.
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A mansion in Melbourne’s inner east has broken the city’s record for a house price.

A Melbourne businessman bought Avon Court in Shakespeare Grove, Hawthorn, on Tuesday night for a sum believed to be between $21 million and $25 million.

The property was sold by Melbourne businessman Clinton Casey, the former chairman of the Richmond Football Club and an owner and developer of retirement homes and property, and his wife Leslie.

Neither the seller nor the buyer of Avon Court wanted the price made public, Kay and Burton real estate managing director Michael Gibson said.

“In terms of Melbourne residential prices it is right at the top of the tree,” he told AAP.

“I would love to tell the world the price, but they (vendor and purchaser) don’t want to.”
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House prices in major Australian cities are forecast to grow by about 20 per cent between now and 2012, according to a report from mortgage insurer QBE Lenders’ Mortgage Insurance (QBE LMI).

QBE LMI’s Housing Outlook report for 2010 to 2012, researched by BIS Shrapnel, confirms that recent low interest rates had helped to alleviate mortgage pressures on households, while bringing housing affordability back to its most attractive level for almost a decade.

QBE LMI chief executive Ian Graham said low interest rates, solid growth in rents and housing shortages would create favourable conditions for a strong recovery in residential property prices through to 2012.

“Double digit house price growth is forecast across all capital cities from June 2009 to June 2012,” Mr Graham said.
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There are lots of property “experts” out there who keep insisting that a real estate crash is coming and scaring people with dire warnings not to buy and not to take on home loan debt.

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People trying to sell their homes are having to substantially lower their initial price aspirations to get the property away, new data shows.

A report by property information provider RP Data shows that vendors are having to cut the original sale price by almost eight per cent in capital cities amid the tough economic climate.

Some coastal areas recorded discounts close to 20 per cent.

The report on property discounting measures the initial advertised price of a property against its ultimate sale price.
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Static house prices and low interest rates have improved housing affordability for first time buyers to their best levels in seven years, a survey says.

The Housing Industry Association-Commonwealth Bank of Australia housing affordability index for first home buyers rose 22.3 index points in the March quarter to 175.8 points.

“This took housing affordability to levels not seen since 2002,” said the report, published on Monday.

“Further drops in interest rates and moderation in house prices in some regions drove continued improvement in housing affordability.”
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The Australian dream of owning a home is more affordable now than it has been for five years following lower interest rates and greater government subsidies, a report says.

The Housing Industry Association (HIA) and Commonwealth Bank First Home Buyer Affordability index improved by 39.2 per cent to 153.6 points in the December quarter, from 110.3 index points for the September quarter.

First home buyers last had housing this affordable in the March quarter of 2003, the index showed.
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The government’s funding boost for first home buyers did little to arrest an eight per cent fall in residential property values during 2008, research has found.

Residential property values nationwide fell, on average, almost eight per cent last year and were expected to slide modestly in the first half of 2009, Australian Property Monitors (APM) said.

“While the first home buyers’ share of the mortgage market increased in November 2008, these latest figures show that the government’s first home buyers boost scheme has done little, thus far, to stem falling property prices,” APM’s senior economist Liam O’Hara said.
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A dependable and accurate house price index is an important tool. High changes in house prices (either up or down) can have a significant impact on consumers, businesses and government. As sales volumes in many areas in Australia fall, the sample sizes used to calculate median prices is reduced.
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Research conducted by Property Data Solutions suggests that property owners who hold for 6 years or longer are getting the best possible prices.

Kent Lardner of PDS conducted the analysis of over 120 property sales over the last 6 months in a variety of suburbs around Sydney and in nearby regional centres. Houses included in the tests had been owned for periods of between 1 and 10 years.
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