West coast boom over"¦ East coast the phoenix

PERTH might have overtaken Sydney as the most expensive capital city but the West Australian property boom is over, a RP Data-Rismark index declared yesterday.

According to the RP Data-Rismark, “Hedonic” Property Price Index, at the same time, Melbourne and Sydney house prices are staging a dramatic recovery.

The index shows house prices across Australia rose by 1% over the March 2007 quarter or 4% on an annualized basis.

City                  March quarter (% change)

Sydney              0.79

Melbourne         1.39

Adelaide            2.69

Perth                -1.37

Canberra           0.01

Brisbane           1.52

Darwin              -2.46

Australia           1.00

Rismark’s research manager Dr Vito Mollica property prices in Sydney rose by 3.2% on annualized basis for the March 2007 quarter, indicating that there may be signs of a recovery.

“Importantly, this is in stark contrast to results that would have been obtained from a typical “median price series” which, with all its well-documented biases, would have recorded a fall in Sydney prices of 9.4% on an annualized basis for March 2007.

“The RP Data-Rismark Index results show that while Perth may have overtaken Sydney as the most expensive capital city with median property prices in excess of $500,000, it has registered its first correction in over two years. According to the RP Data-Rismark Hedonic Index, property prices in Perth fell by as much as -5.48% on an annualized basis during the March 2007 quarter, suggesting that the Perth property boom may have finally come to an end,” he added.

Dr Mollica said interestingly, Melbourne looks to have staged a recovery, with property values rising by nearly 6% on annualized basis in March 2007.

According to the index, Adelaide and Brisbane are clearly the stand-outs, with annualized price growth of 10.76% and 6.08% recorded respectively during the March quarter.

Darwin prices along with Perth, tumbled by nearly 10% on an annualized basis during the March quarter.

RP Data’s chief executive Graham Mirabito said given the importance of the $3 trillion residential real estate asset-class to Australian families and policymakers, RP Data and Rismark saw a need and an opportunity to respond to the deficiencies of the past.

GFI’s senior managing director for Asia Pacific Jurgen Breuer said house price derivatives will be useful for investors who want to gain, diversify or hedge their exposure to residential property, without the complexities associated with transacting in the underlying ‘physical’ market.

Australian Property Journal