Latest NewsProperty Prices Push Up, but Bargains Still AvailableWednesday, 14 September 2016

Capital city housing markets have shrugged off the global financial crisis, with values rising 5.9 per cent in the first seven months of the year, surpassing the last market peak in February last year.

Darwin led the growth with values increasing 10.8 per cent to a median price of $466,903, while Melbourne values rose 8.5 per cent, taking prices to $454,524, and Sydney's housing prices were up 6.6 per cent to $537,396, according to residential researcher RP Data-Rismark's Home Value Index.

Housing prices first edged over the previous peak in June, but by July had breached the previous high by 1.8 per cent, Rismark International managing director Christopher Joye said yesterday.

The strongest population growth since 1971 - from both increased immigration and a rising fertility rate - allied with low interest rates, a resilient jobs market, and a shortage of housing running at a 200,000 undersupply, had underpinned housing values, Mr Joye said.

Australia's housing market had very few distressed sellers, helping to keep a floor under prices, he said.

Mortgage default rates were 0.6 per cent in Australia compared with 5 per cent in the US and 3 per cent in Britain.

"Notwithstanding headwinds associated with the withdrawal of the first-time buyers boost in December, a steepening yield curve that is gradually driving up the cost of fixed-rate loans, and the Reserve Bank's shift to a tightening bias, we believe the housing market will grind out further modest gains over the course of the next 12 months," Mr Joye said.

On October 1 the first-home owner grant falls from $14,000 to $10,500 for established homes, and from $21,000 to $14,000 for newly built homes.

On January 1 the grant falls to $7000 for all homes.

While Sydney's residential values had turned around, Mr Joye noted that it had lagged the other capitals.

New home sales have already slowed, inching up only 0.1 per cent for July, after a 0.5 per cent rising in June, according to the Housing Industry Association.

Houses and units are selling fastest in Sydney and Melbourne, with houses in both cities averaging 28 days on the market from their listing date, and units 25days.

In other cities, price rises were slower this year. Canberra values increased 5.4 per cent to $477,627, Brisbane values were up 3.8 per cent to $437,175, Perth rose 2.5 per cent to $481,493 and Adelaide prices increased 1.9 per cent to $402,681.

Mr Joye noted home loan mortgage rates were 5.7 per cent compared with 9.6 per cent a year ago. Home owners and buyers should be able to cope with interest rates rising to a forecast 7per cent by June, with banks working on the premise that borrowers could absorb interest rises of about 2 per cent, he said.

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