Posts Tagged marketing

Spring will see investors warm to real estate

Aug 30

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real-estate-investor WARMER weather will combine with other favourable conditions to fuel the appetites of potential property investors, according to Australia’s largest independently owned mortgage broker.

The latest Australian Bureau of Statistics housing finance report saw the value of investment housing loans drop for the first time in four months in June 2010 by a seasonally-adjusted 3.6 per cent to $7.3 billion, the lowest value reached since February this year.

However, this compared favourably to $6.5 billion in June last year.

Many market commentators say this buyer group had been holding back until the election was over and the traditionally strong spring selling season begins. They won’t have to wait much longer.

Mortgage Choice senior corporate affairs manager, Kristy Sheppard says that according to RP Data, Australia typically sees higher than average property activity from September through to November.

"This year should be no exception, despite a possible lag effect from the hung parliament," she said.

"There are already more properties on the market than usual at this time of year.

"That is good news for prospective investors, as is property prices plateauing in many areas and dropping in some; rental prices increasing; strong population growth continuing; consumer sentiment rising and the sharemarket continuing to be unpredictable.

"Housing undersupply is a serious issue in Australia and ABS building approval figures show a fall for a third consecutive month in June to reach the lowest level since August last year.

"Hence, many investors believe the long-term potential of property as a stable asset class is excellent.

"With fewer new properties there is bound to be a pick-up in rental price growth — we are seeing that happen already.

"Australian Property Monitors Rental Market Report for the June 2010 quarter shows that from April to June, rental prices for houses rose nationally by 0.7 per cent, bringing annual growth to a relatively small, but very encouraging, 3.1 per cent.

"The unit market was stronger, with rents increasing nationally during the last quarter by 3.5 per cent, bringing the annual growth rate to 4.2 per cent.

"This bodes well for people who research the property market thoroughly, have a long-term strategy in mind and investigate all their finance options so they make a sound investment decision.

"Prospective buyers must be aware that lenders have tightened loan assessment criteria for investors as well as owner occupiers.

"Many have limited their loan to value ratios to 90 per cent of the purchase price for both buyer groups, with some going even lower.

"Also, genuine savings are essential, whether in the form of a cash deposit or existing property equity.

"Both buyer groups will need to plan ahead to satisfy their chosen lender’s requirements.

"Preparing for rate movements is also vital to the planning process.

"The cash rate will probably remain stable for the next couple of months but many lenders are signalling that funding costs may force them to raise borrowing costs independently of the RBA’s rate cycle.

"It will be interesting to see how many Australian investors spring into the property market over the next quarter and what effect, if any, lender rate rises will have."

Source: www.goldcoast.com.au

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New risks threaten house price bubble

Aug 27

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housingprices Gerard Minack, a senior economist at Morgan Stanley, predicted two years ago that house prices were set to experience a dramatic 30 per cent fall by this year given rising unemployment.

”Australian houses are much more overvalued than US houses; indeed, on some measures, our houses are arguably the most expensive in the world,” Minack said.

”My very simple take on it – the bigger the bubble, the bigger the pop.”

But with no snap crackle or pop, and debate still raging whether there has been a bubble, Minack last week revised his script to envisaging the bubble deflating, not popping.

”Dodging the worst of the global financial crisis didn’t demonstrate that there’s no bubble. In my view it just showed we dodged the prick,” he said.

”I’m not persuaded by arguments that houses are sustainably priced. Most measures suggest house prices are around 40 per cent above fair value. However, the risk of big price declines in the near term seems low.”

Minack points out that much of the discussion about the residential market future overly concentrates on owner occupiers despite a jump in taxpayers reporting rental income jumping from 608,000 in the late 1980s to about 1,765,000 now.

He notes the percentage of landlords claiming a rental loss (that is, rent not covering interest and other costs) has risen from 50 per cent to 70 per cent over the past decade.

With broad-based job losses appearing unlikely, Minack now sees the more imminent risks to property price growth as the

banks tightening credit and negative-gearing landlords departing the market due to low capital appreciation.

Ignoring the fact that investment property for many is their nest egg in the absence of superannuation, Minack envisages property investors becoming disillusioned with the ensuing widespread disposal of their investments. ”This is an investment that depends on capital gain for its payback. With net income not even covering interest charges, this is a classic Hyman Minsky Ponzi scheme,” he says.

”The real return on residential property over the next decade is likely to be negative.”

Minack also took aim at the Reserve Bank deputy governor, Ric Battellino, who recently said that 75 per cent of household debt was held by the upper 40 per cent of income earners.

”It is simply wrong to assert that rental properties are largely owned by high-income households: losing on residential property investment is largely a middle-class affair,” Minack writes.

”Taxpayers who earn $80,000 or less own 80 per cent of all loss-making properties.”

His 10-year negative return timeline forecast is offered without explanation. But the prospect of a price plateau rather than a pop is a much more plausible position for Minack to now embrace. This is especially so for Sydney which recorded a slump and then negligible price growth for many years after the last investor-inspired boom that peaked in 2004.

Some further excessive froth in Sydney pricing that was evident by late 2007 and early 2008 was removed by the global financial crisis fall-back.

It wasn’t until late 2009 that Sydney’s median house value finally surpassed the $568,000 peak of early 2004, according to Australian Property Monitors. At its worst, during the global financial crisis, the median was 6.5 per cent off its earlier peak. It’s now at $625,000.

But Minack, who lives in Mosman, has only to sound out another economist, Stephen Koukoulas, to know that many neighbourhoods across Sydney are going nowhere fast.

Koukoulas, now based in London as the chief global markets strategist for TD Securities, sold out of Mosman earlier this year for $1,175,000. The Mosman house had traded at $1,285,000 in 2007.

Mosman’s pricing is problematic, but Minack’s abandonment of his bubble pop forecast is especially intriguing as Melbourne’s price juggernaut has put it in a more precarious position than Sydney.

Melbourne’s dwelling price growth over the past decade sits at 174 per cent compared with Sydney’s 83 per cent, according to Australian Property Monitors.

Over the past five years it has been 66 per cent in Melbourne and 17 per cent in Sydney.

The latest Housing Industry Association affordability survey for the June quarter suggested Melbourne could shortly rank alongside Sydney as the least affordable Australian cities.

The HIA chief economist Harley Dale noted affordability dropped year on year by 39.8 per cent in Melbourne and in Sydney by 33.5 per cent.

”If that trend were to persist then you would rapidly be approaching a situation where Melbourne is on a par with Sydney in terms of [least] affordability,” Mr Dale said.

Story by Jonathan Chancellor www.domain.com.au

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Election casts a shadow

Aug 27

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images As a cloud of uncertainty hangs over Canberra, real estate agents will be wringing their hands together hoping that we have a stable government formed as soon as possible.

There’s nothing like a federal election to slow the wheels of the housing market, many agents say. So when Julia Gillard decided to take Australians to the polls before spring arrived, property insiders were quietly saying their thanks that the whole show would be done and dusted before the biggest sales season of the year arrived.

Within a few weeks, they said, everyone would get back to their day-to-day activities, including the all-important decision of where to live. It’s interesting to note, though, that even though many sellers weren’t keen on going under the hammer on election day, there were some buyers about. Perhaps driven by the low stock levels, auction clearance rates hit 75 per cent in Melbourne and 66 per cent in Sydney on Saturday, although were much lower in Brisbane and Adelaide, at 26 per cent and 30 per cent.

When it comes to the effect of the election, it’s not so much that either major party offered up any overly exciting housing policies, it’s more that buyers and sellers prefer certainty at all levels when they are making such an important decision.

“People see uncertainly as a reason to sit on their hands and do nothing,” says Craig James, the chief economist with CommSec.

“What it means is you may see vendors holding back listing their property for another fortnight or so, which certainly wouldn’t be a positive outcome for the property market, real estate agents in particular.”

However, James questions whether this is necessary. “I suppose what a lot of people have got to ask themselves is, ‘is anything going to change dramatically, if you have a Liberal minority government or a Labor minority government?’”

James says for both sides in the election, property wasn’t a major consideration. “There’s nothing in terms of the major policies that are likely to change things ,” he says. “So I would’ve have thought that vendors and budding buyers should be getting on with business but that may not be the case.”

As we head into spring you would normally expect to see plenty of hot properties come flooding onto the market, which may be delayed now. But David Airey, Real Estate Institute of Australia president, says the industry was already forecasting a quieter than normal spring as the six recent interest rates continue to bite, the market stabilises after some pretty substantial increases earlier in the year, and a cloud from the global economic uncertainty hangs over Australia. “People aren’t confident enough to go delving into the market with any great expectations at this stage,” he says.

Airey doesn’t think the uncertainty will have much impact on people buying and selling places to live in themselves, but he does expect investors will hold off making a decision until the situation is clearer.

One thing that Airey has on his radar is the possibility the major lenders could use a once-in-a-lifetime opportunity to improve their margins while the government is in caretaker mode. He’s not expecting to see the Reserve Bank move on the rates for the rest of the year, but he thinks an opening exists for the banks to make some quiet adjustments.

“There’ll be the least resistance from government to those rises and even if there was resistance or reaction it would be meaningless in a limbo situation,” Airey says. “Effectively we have no national government or a weakened national government, which will allow the banks to have a look at interest rate rises on the break basically. They’ll be taking the opportunity to say ‘gee, now would be a time to tweak up our rates with very little resistance or reaction from the market’, and that worries me a lot.”

When the situation will be resolved is difficult to tell, although that changes minute by minute. There is talk from independent MP Rob Oakeshott about the possibility of heading back to the polls if a solution can’t be found that installs a minority government. Real estate agents around the country have their toes crossed hoping that doesn’t eventuate. From Airey’s point of view a second election would be disastrous and would leave the entire country into a state of limbo.

Carolyn Boyd is a property journalist and keen follower of Australia’s housing market.

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Hung parliament to hit Australian markets

Aug 24

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Abbot Australia’s political deadlock is set to hurt financial markets with the uncertainty expected to send share prices and the local currency lower, analysts said Sunday.

In elections Saturday, neither the ruling Labor Party nor opposition Liberal/National alliance won enough seats to govern alone.

“Markets traditionally don’t like uncertainty and clearly markets would have been anticipating a (clear) result,” UBS economist Scott Haslem told AFP.

“So the market will have to deal with some uncertainty when it opens up on Monday.”

In advance of the election, Sydney’s main share index lost 1.07 percent, or 48.1 points, to 4,430.9 on Friday in line with regional falls.

Haslem said the Australian dollar would likely fall amid the stalemate, which has seen Labor Prime Minister Julia Gillard and her conservative opponent Tony Abbott battling to win the support of five minority MPs.

“What is more likely is that you end up with more volatility than you end up with a fundamental move in the currency, because fundamentally nothing has changed (to the economy),” he said.

The hung parliament leaves the future of the government’s plans for a tax on the nation’s profitable mining sector and a national high-speed broadband network hanging in the balance.

Commsec chief economist Craig James said any political uncertainty was “a major negative for financial markets”.

“In the short term the Aussie (dollar) has the potential to lose ground,” he told AFP, saying the currency could lose as much as one US cent after closing Friday at 89.05 cents.

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Melbourne to top Sydney as least affordable city

Aug 20

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housing_market_troubles MELBOURNE could overtake Sydney as the least affordable Australian city to buy a home in if trends showing housing affordability plummeting to near-record lows continue.

A combination of interest rate rises and property price growth has seen housing affordability worsen more in Melbourne than other capital cities over the past year.

The deteriorating situation for first home buyers and young Australians was revealed in the latest Housing Industry Association affordability survey for the June quarter.

The HIA-CBA Housing Affordability Index fell 9.1 per cent over the last three months to be 32 per cent lower compared to the same period last year, showing a worsening situation nationally.

Affordability in regional Victoria fell by 9 per cent. In Melbourne, it dropped by 6.7 per cent, down 39.8 per cent on a year ago.

The index combines interest rates, household incomes, home prices and other factors, such as the removal of the first home buyers’ impetus to determine housing affordability.

It doesn’t give a suburb-by-suburb breakdown of the most or least affordable places in capital cities or regions.

According to property analysts RP Data, the most expensive electorate to buy a home is Wentworth in NSW. It includes Sydney’s wealthiest suburbs: Point Piper, Bellevue Hill, Vaucluse, Double Bay and Dover Heights.

On a more simple measure of affordability, the median house price of the marginal Liberal seat held by Malcolm Turnbull – which needs a swing of 3.9 per cent to change hands – is a staggering $1.65 million.

By contrast, Julia Gillard’s safe Labor seat of Lalor – held by a margin of 15.5 per cent – has a median house price of $300,000 and is the most affordable metropolitan electorate in Australia, RP Data analyst Tim Lawless said.

It includes the suburbs of Laverton, Point Cook, Werribee, Rockbank and Melton.

Neither main political party has released significant policies addressing home affordability or high house prices, despite the federal election being two days away.

"There has been a dire lack of commitment in this federal election campaign to address the substantial hurdles aspiring home owners face," said HIA chief economist Harley Dale.

In Melbourne, affordability dropped year on year by 39.8 per cent. Affordability in Sydney, by contrast, dropped 33.5 per cent. ”If that trend were to persist then you would rapidly be approaching a situation where Melbourne is on a par with Sydney in terms of [least] affordability,” Mr Dale said.

Housing affordability reached a record low in March 2008 when bank interest rates were above 9 per cent. The latest score on the affordability index in Melbourne is one point above the low of 2008.

The largest falls for the June quarter were recorded in Sydney (-9.1 per cent), Regional Victoria (-9.0 per cent), Regional Tasmania (-8.8 per cent) and Adelaide (-8.7 per cent).

Story by Simon Johanson domain.com.au

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Pets abandoned as rental market heats up

Aug 20

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Dogs Thousands of animals across the country are being abandoned every year because landlords are unwilling to rent homes to people with pets, the RSPCA says.

The RSPCA manages about 160,000 animals Australia-wide each year, and the charity’s ACT chief Michael Linke says shelters are bursting at the seams because changing living situations mean people can no longer stay with their pets.

"It’s unfair someone’s expected to surrender an animal under those circumstances," he said.

"It’s a heartbreaking thing. I’ve sat in the room with people as they’re surrendering their animals; they don’t want to do it but their choices have been limited.

"It’s their only option because of pressure on rental accommodation, and they’ve taken that difficult decision.

"It’s heartbreaking for our staff, but then we’ve got the double whammy because we then need to find a home for that animal."

Mr Linke says pet owners struggle trying to rent private and single-dwelling houses the most.

"We’ve been calling on the Real Estate Institute and private land-holders to loosen the ties a bit and be more forthcoming in allowing people with pets to find accommodation, because we’re finding a lot of people are surrendering animals to move into free-standing houses," he said.

Jacqui Limberger and her partner Ryan Blunden created a software application which helps find pet-friendly rentals on realestate.com and domain.com.

Their website also helps pet owners write a resume for their furry friends, to help give them a better shot of being approved by real estate agents.

"Research has show a lot of landlords and agents may not even consider letting to someone with a pet until they’ve seen its credentials and references from other landlords," Jacqui says.

"It gives applicants another piece of evidence to say ‘My pet’s not a problem, I’m a good tenant and I take responsibility for my pet.’

"It’s about providing people with information and resources, so landlords see pet renting doesn’t have to be a problem and also to help applicants put their best foot forward."

Inner-city kitty?

But there may be some good news for pet lovers.

The RSPCA’s Mr Linke says that these days, there’s more chance of then being approved to rent units and apartments, and a new study has found you don’t necessarily need a big back yard to own a dog or cat.

Susie Willis from the Petcare Information and Advisory Service (PIAS) says a recent study of 800 people found pets and owners who live in units are just as happy as those who have backyards.

"There are some breeds of dogs that really fit indoor living – like pugs, whippets, french bulldogs – that don’t actually like it too hot or too cold, so being indoors is ideal for them," she said.

"Toilet training is obviously important but the reality is, most healthy adult dogs can be quite happy with two or three toilet breaks a day."

She says there’s no reason for people who live in a small inner-city place to not have a pet, and the PIAS has put out a ‘how to’ guide to help people out.

"We’ve got tips on how to prevent people from becoming bored, exercise, how to create a pet-friendly environment," she said.

"The whole point is, you can keep dogs without a backyard, but you do have to be careful with the way you manage the situation.

"We go through things from what to think about when choosing a dog or cat, how to find reliable sources to get them, what to think about when deciding on different breeds, and then we look at common problems and give tips and advice on how to solve issues.

"We also look at rental situations because it can be difficult to own pets in that situations.

"One of the things we’re conscious of doing is trying to make sure that people don’t get the wrong sort of pet and they don’t get a pet if they can’t give the necessary commitment to its ongoing care."

Story By Cassie White – ABC News

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Pedlars of House Price Doom off the Mark

Aug 18

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Reserve Bank of Australia The level of household debt in Australia has risen over the past three decades from less than 50 per cent of household disposable income to about 150 per cent.

Ric Battellino, the Reserve Bank of Australia deputy governor, has sought to allay concerns that this indebtedness means we face a risky unsustainable outlook. He said that 75 per cent of household debt was held by the upper 40 per cent of income-earners.

The bank’s governor, Glenn Stevens, had earlier given the RBA’s estimate of Australia’s dwelling price-to-income ratio, which found that dwelling prices in capital cities were typically 4.8 times disposable household incomes – about half the ratio put by the doomsaying international survey Demographia.

The Commonwealth Bank chief executive, Ralph Norris, was asked after the bank announced a $6 billion profit last week whether the housing doomsayers were nuts.

”I wouldn’t go as far as to say they’re nuts but I think that it’s very easy to make assertions based on averages,” he said. ”You come to a different view when you look at the fact that the incomes based around averages are not relevant to the average person that has a mortgage.

”So you know, we’re in a situation here where, in my view, the housing market in Australia is healthy.

”There will obviously be variations in price and we shouldn’t be surprised if there are, you know, drops of 5 per cent or 10 per cent, as there are obviously increases in value.

”But I think the range of value is not going to be anything that suggests a bubble and a collapse of the housing market in Australia.”

Deutsche Bank issued a research paper last week suggesting Australia’s house prices were not as vulnerable as doomsayers argue.

While acknowledging that on many comparisons Australia had a high house price-to-income ratio and high levels of household debt, the Deutsche Bank economists Phil O’Donaghoe and Adam Boyton argued the vulnerability of Australian housing was ”overblown”.

”The housing market is perhaps the most common vulnerability we are asked about in the Australian economy,” the said.

”Combined with the role played by the US housing market in the financial crisis, investor awareness and suspicion of this key asset class is perhaps understandable.

”But we have long held the view that a broader assessment of the Australian housing market offers a more sanguine conclusion.”

The Deutsche Bank report noted that mortgage debt obligations in Australia were fully recourse loans and borrowers’ mortgage obligations extend beyond the mortgaged property, therefore providing a greater incentive for repayment relative to the United States.

Battellino suggests the strongest evidence on the sustainability of household debt was the low level of arrears. This was evident again this week in housing repossession data.

Repossession actions lodged in the NSW Supreme Court for the first six months of 2010 totalled 1198.

There were 3800 last year and 4000 during 2008. The peak year was 5300 in 2006.

Foreclosures in the US rose 4 per cent from June to July, exceeding 300,000 for the 17th month in a row, according to RealtyTrac.

The number of foreclosure activities, which incorporates all phases of foreclosure including default notices, scheduled auctions and bank repossessions, totalled 325,229 in July.

Lenders seized 92,858 properties last month, the second highest monthly total since RealtyTrac began tracking repossessions in 2005. Total foreclosure activities reached 1.65 million in the first six months of 2010.

Deutsche Bank noted that Australian house price concerns were ebbing. ”The pulse in housing finance has moderated in line with rises in the cash rate. The housing cycle points to a steady moderation in price pressures.

”Elements of the market which had been described by the RBA earlier this year as demonstrating elements of ‘considerable buoyancy’ have moderated. Auction clearance rates have also slowed.” From a peak of 72 per cent at the end of last year, auction clearance rates had fallen by last month to 61 per cent, Deutsche said.

Story by Jonathan Chancellor www.domain.com.au

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What Do You Like About Mudgee?

Aug 16

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TPS - What do you like about Mudgee - Kaye Green TPS - What do you like about Mudgee - Lloyd Potts

The What Do You Like About Mudgee? competition draw for two 50" LG HD televisions was drawn today on 1449 2MG and 93.1 Real FM.

Drawn by well known Mudgee identity Col Matthews, the winners were Lloyd & June Potts and a very happy Kaye Green.

We thank everyone that participated and took the time to let us know what they like about Mudgee.

We will now use your comments in promoting this magnificent region to potential investors and lifestylers who are thinking of relocating.

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A renovation value proposition car parking

Aug 16

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Car Parking at a premium The days of only looking for a property through the paper have changed, with the majority of people these days starting their search online and loving the flexibility of being able to set up alerts and notifications so they get told when a property that meets their search criteria becomes available in the marketplace.

Purchasers can first narrow down the number of potential properties they’re interested in through use of criteria such as: location, price, property type, number of bedrooms, number of bathrooms, land size, car parking, etc.

They’ll then look at the results that have been returned by the search engine they’re using and narrow it down further. They’ll do so according to the first impression they get from the photo, heading or first sentence. They’ll only open some of the listings to actually read the description in full and see all the photos.

So my question is this… If you’re going to put in parking into your investment property, which is going to give the best returns? Does having a garage add more value then a carport? And what about a shade sail? Or just a driveway with an uncovered parking space? Are potential buyers or tenants even going to care too much about what type of parking it is, as long as it has some?

The majority will argue that a garage will bring in the highest returns (how much it adds to the value of the property compared to how much it costs to put in), especially if the garage is needed for more reasons than just parking the car.

It’s often perceived as a space with multiple uses. There’s the potential to use the garage as an additional storage space or as a handyman’s workroom. It also provides additional security for the occupier’s vehicles and other belongings.

For some people it can also be an additional living space, like a rumpus room where they might have a pool table, bar, etc.

On the other hand building a garage also costs the most and involves getting plans approved by the council which can introduce additional delays for the project. All in all a new double garage costs somewhere around $40,000 these days inclusive of all costs. And it tends to add somewhere between $50,000 and $70,000 to the bottom line of a property investing deal, depending on the location of the home.

So is it really worth it? If you have that much extra in the budget for your renovation, then it probably is. But not everyone does.

A carport does cost less to construct and still provides undercover parking for cars, however it also requires getting a permit from the council which may cause delays and introduce additional costs. So what does that leave us with?

The shade sail. In some councils having a cover which isn’t 100 per cent solid which is under three metres in height may not require council approval. They still protect your vehicle from UV rays and the higher quality ones can be fairly weather resilient.

They can also look very modern in appearance and are quite often used in new developments and display homes. You can get them for around $1500 to $3400 (3m x 6m) including poles and fittings. Surprisingly they tend to increase the bottom line of a renovation deal more than a standard carport. They tend to increase the value of the home by about $5000 to $15,000.

Interestingly having uncovered parking doesn’t add as much value to the renovation deal as you’d think. Although most people would be happy that a property has some parking they won’t value it as much as any of the other options.

There are exceptions as always and central business districts of most big cities fall into that category where any parking at all is considered a blessing.

 

Ana Stankovic is well known as one of Australia’s leading renovating-for-profit specialists and is regularly featured in prominent industry publications, expos and continually educates investors.

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One year adds $98,000 to house

Aug 11

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houses prices increase The extraordinary growth in house prices in Australia’s capital cities over the past year has resulted in the value of an average home in Melbourne rising by nearly $98,000.

In Sydney, the price increase for an average home peaked even higher, above $104,000.

House price figures for eight capital cities released by the Australian Bureau of Statistics yesterday show year-on-year growth from June 2009 of 24.3 per cent in Melbourne and 21.4 per cent in Sydney.

A 24.3 per cent rise above the median Melbourne house price of $403,000 for June 2009 equates to an annual increase of $97,929. Similarly, a 21.4 per cent rise above Sydney’s median 2009 June price of $490,000 equates to $104,860.

The figures provide welcome news for first home buyers, indicating the growth in property prices has peaked and is now declining.

Melbourne prices grew by 3.6 per cent over the June quarter compared with growth in the March quarter of 6.7 per cent.

Economists suggest property prices are likely to flatten, rather than decline significantly, and then remain stable.

”It’s still pretty incredible growth, given we have had six cash rate increases,” Nomura Australia economist Stephen Roberts said. ”That tends to rule out any relief from lower interest rates, too, for some time. The last thing this housing market needs is any stimulus from lower rates.”

Economist Saul Eslake from Melbourne’s Grattan Institute said the ABS figures confirmed data released last Friday that showed property prices declining in June. ”It’s consistent with all the other evidence of lower clearance rates and lower volumes,” he said. ”A lot of the heat that was in the market when interest rates were lower and when there was more government support in the form of grants has now dissipated.”

Overall, Australia’s house price growth slowed less than expected in the June quarter. Economists were predicting growth of 2 per cent but capital city house prices rose 3.1 per cent, following a revised 4.2 per cent rise in the March quarter, according to the ABS.

Economists suggest demand may continue to keep prices stable, with 200,000 new homes needed to house Australia’s growing population.

This comes despite dwelling approvals posting a surprise 3.3 per cent fall in June and the volume of new home sales also declining.

Brisbane recorded the slowest property growth rate with an 8.5 per cent increase. Canberra prices rose 19.6 per cent, Darwin 14.6 per cent, Adelaide 11.6 per cent and Hobart 10.8 per cent, the ABS data shows.

The combination of growth in house prices, a strong labour market, the push for wage increases and other inflationary factors was likely to add to the case for the Reserve Bank lifting interest rates towards the end of the year, Mr Roberts said.

House prices were also affecting other parts of the economy. Households forced to pay off large mortgages were ”scrimping and saving”, which was affecting other sectors such as retail sales, he said.

Story by Simon Johanson www.domain.com.au

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