The March quarter housing prices released yesterday were clearly a tale of two cities.
On one side of the country – in the west we are presently witnessing an uncontrolled housing boom and in the east – namely Sydney – we are witnessing a housing market that has finally come back to earth thanks mainly to the Reserve Bank.
Sydney was the only capital city in Australia that didn’t see growth in established house prices in the March 2006 quarter with prices instead easing back for the sixth time in the last eight quarters.
In Perth, established house prices rose by 8.8% in Perth – and almost 30% over the past 12 months.
The figures have left many property analysts wondering how far can Perth prices go, and how far Sydney prices can come back.
Yesterday’s official numbers from the Australian Bureau of Statistics confirm that overall established prices fell by 1.2% in Sydney to be down by 3.1% on the March quarter last year.
New house prices also eased, but only by 0.2%, but remained 1.3% higher than a year earlier.
The HIA declared the easing in house prices was only moderate but was consistent with soft housing conditions in Sydney.
HIA’s executive director, New South Wales, Wayne Gersbach said that house prices growing everywhere except Sydney highlighted the weak nature of the housing market in Sydney.
“Housing activity is extremely weak and house prices are moderating,” Gersbach said.
“Sydney’s housing market continues to remain under immense pressure as the supply of rental housing fails to keep up with demand, sending vacancy rates to record lows.”
Gersbach said that in addition, Sydney’s new home builders face ever increasing challenges in putting affordable homes on the ground which has resulted in the supply of new housing falling below underlying demand for two years now.
“While no-one wants large and rapid falls in house prices, pressure needs to be lifted off the housing sector by increasing the supply of affordable housing and attracting private rental investment.
“There is a pressing need to lower the cost of land and ease the tax and regulatory burden on Sydney’s building community.”
On a city by city basis, over the March quarter established prices increased by 8.8% in Perth, and rose by 3.4% in Hobart 3%; Darwin 2.4%; Adelaide 0.8%; Melbourne and 0.2% in Canberra.
Prices were flat in Brisbane.
For new homes – excluding the land cost – prices fell by 0.2% in Sydney and by 0.9% in Melbourne, while prices held steady in Brisbane.
Elsewhere prices increased, rising by 3.8% in Perth, 3.2% in Darwin, 2% in Hobart, one per cent in Canberra, and 0.7% in Adelaide.
By Ted McDonnell
