Not happy of being in second, Perth is about to do capture Sydney’s status as the most expensive city in Australia, According to Australian Property Monitors, the house price margin between the two cities is only 5.5%.
According to APM’s September Quarter Housing Price Series, a two-tiered national housing market is apparent with property values performing sluggishly across all major capital cities, except for Perth and Darwin which continue to outperform.
And APM said Perth property prices are now within reach of eclipsing Sydney as the country’s most expensive.
The margin between adjusted medians for the country’s most expensive capital city, Sydney and Perth is now only 5.5%. Only three years ago Perth house prices were less than half of Sydney.
Perth and Darwin house prices experienced growth on the previous quarter at 5%. Although there are signs that Perth and Darwin property prices are reaching their peak with Perth house price growth decelerating from the previous quarter change (March qtr 06 to June qtr 06) of 13%.
Despite slowing growth, the annual percentage growth for Perth house prices to the end of September is an impressive 39%. Similarly, Darwin’s annual percentage growth for houses to the end of September is 18%.
APM’s spokesperson Michael McNamara it is also noteworthy that Darwin has now eclipsed Melbourne and Brisbane as the fourth most expensive capital city in Australia for median house prices behind Sydney, Perth and Canberra.
“Perth median house prices are growing at 39% per annum. This is clearly unsustainable and we predict that the Perth and Darwin property markets will reach their peak in the December quarter 2006. For these markets much depends on commodity prices as property prices correlate strongly with the commodities index,” he added.
Across the Eastern seaboard property markets remained stagnate with house prices in Melbourne, Brisbane and Adelaide experiencing 0% growth for the September quarter.
Whilst in Canberra and Sydney, prices eased by 1% and Hobart recorded a 1% increase.
McNamara said early this calendar year property markets in Sydney, Melbourne and Brisbane showed positive signs leading to belief that moderate quarterly growth in median prices would be expected throughout 2006.
“However, two interest rates rises this year has seen buyers in those markets retreat to a more cautious position. Eastern seaboard capital cities are now experiencing a stabilisation phase in their property cycles and we predict that trend will continue for the next 12 to 18 months.
“With strong indications of a November interest rate hike, there is much speculation on the affect of such a rise on the property market. Buyers have already factored in one more interest rate rise into their decision making. On its own, Tuesday’s predicted cash rate increase will not affect the property market significantly. We do caution however, that if speculation deepens about an additional interest rate rise early in 2007, buyer confidence will be significantly impacted,” he added.
McNamara said uncertainty as to where interest rates will end up in the mid term could see percentage of growth in property markets nationally worsen by up to 5% by mid 2007.
Meanwhile unit prices in Perth and Darwin also continued to outperform those in the eastern capital cities.
Small 1% to 2% declines for the September quarter were recorded in the unit markets for Melbourne, Sydney and Hobart and a 1% increase in unit prices was recorded for Brisbane and Canberra.
For the quarter, Adelaide, Perth and Darwin all recorded 5-6% increases. Perth and Darwin unit prices grew for the year to September quarter by unsustainable levels.
Perth unit prices are 44% and Darwin at 37% higher for the 12 months to September 2006.
The adjusted median for Perth units is now only $10K less than Sydney units.
By Kathryn O’Meara
