APM: House prices lifted in September quarter

ScreenHunter_04 Nov. 12 09.44

By Leith van Onselen

Australian Property Monitors (APM) has released its September quarter house and unit price results (below), which recorded a 2.2% increase in house prices over the quarter at the national capital city level, and a 1.2% rise in national capital city unit prices.

In the year to September 2013, APM recorded a 7.8% increase in national capital city house prices and a 5.5% rise in unit values.

Looking at the capital city breakdown, you can see that Darwin and Sydney led house price growth, with prices jumping by 5.0% and 4.2% respectively over the quarter. Hobart (+2.4%), Melbourne (+2.2%), and Brisbane (+0.7%) also recorded gains, whereas prices fell in Canberra (-1.4%) and both Perth and Adelaide’s prices were flat.

ScreenHunter_09 Oct. 25 07.30

It should be noted, however, that some of the reported price movements were caused by revisions to the June quarter, which particularly affected Melbourne’s result (prices actually fell from the previously reported result). The median price changes excluding revisions are shown below: 

  • Sydney: +4.7%
  • Melbourne: -0.6%
  • Brisbane: +1.3%
  • Adelaide: +0.8%
  • Canberra: -2.4%
  • Perth: +1.1%
  • Hobart: +1.6%
  • Darwin: +5.1%
  • National: +1.9%

Unit price performance was mixed. Prices rose in Sydney (+3.3%) and Darwin (+5.1%), but fell in all of the other capitals:

ScreenHunter_10 Oct. 25 07.40

Again, results excluding revisions to the June quarter are shown below:

  • Sydney: 4.7%
  • Melbourne: -4.9%
  • Brisbane: +0.8%
  • Adelaide: -0.9%
  • Canberra: -0.1%
  • Perth: -1.4%
  • Hobart: +0.4%
  • Darwin: +5.3%
  • National: +1.8%

APM uses a similar stratified median methodology to the Australian Bureau of Statistics (ABS), which suggests that the ABS should also record solid growth nationally when its house price index is released next month (although the two series do often diverge).

The full report is available for download here.

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Comments

  1. YoY growth in Sydney and Melbourne is insane. This is really scary as I can’t save fast enough. My only hope is a crash and soon!

    I wonder though.. At what point would growth be uncomfortably high for our sadistic leaders? 11% is way above inflation but they have previously been happy with 20‰.

    I don’t know what to do but with the planning fail mentioned, there seems to be a growing number of pro bubble policies around.

    I’m still waiting for a youth protest. I tried but didn’t get any traction so maybe MB would have more luck. Maybe sooner is better than later. If this gets worse, I and surely many others are going to support a very bloody protest starting at the parliament. At the moment, I’d be happy with acknowledgement of the bubble and some baby steps such as macro prudential.

    • I don’t know about other posters here, but this lift in prices is merely making me more determined not to buy anything. I’m even considering going back to the US, where for the price of a brick-veneer Australian bungalow, I can buy a small mansion! 😯

      • We’ve recently come back to Melb after spending a number of years overseas.

        Haven’t bought earlier because of moving and living in different parts of the world. We’re potential FHBs, 30s, DINKs on fairly reasonable incomes (but that may change soon as we’re planning on starting a family)…

        I’ve held off of buying (even though looking at the areas we’re considering buying we’d be able to buy with a small to no loan) – simply because when I look at the prices, I just can’t seem to justify it.

        Am I crazy ?

        There’s people willing to borrow 80-90% for an 800K house, and I think that’s crazy. I could buy that house for 800K, sure, but I keep thinking there’s so much else I could do with that money I’ve worked hard to save up – I could rent for < 4% of that cost and use the money for other more productive investments or start my own small business.

        The other half has asked – "when are we getting our own home" – and with prices seeming on the rise again – I'm starting to question my logic myself…

    • You’ll be waiting a long time. The youth are too busy calling everyone a racist and a misogynist, while we have mass immigration and a reliance of two “professional” incomes making house prices go up.

      • You are right about the 2 professional incomes. I am single on almost 90k and a 350k home seems wildly expensive for me. And yes immigration is all about covering up living standards with aggregate GDP growth.

        All this also makes me want to leave Australia. These tyrants couldn’t care less if we did all starve to death.

      • What you need to do is rent a nice house and live a good life that is free from debts.Just put this house ownership thing out of your mind.Spend the extra money on all good things you wanted.You are putting yourself under mental stress everyday waking up hoping that house prices would crash.Just get on with your normal life.Develop a few new hobbies.This is what I have done and I am quite happy with the path I have chosen.

      • flyingfoxMEMBER

        @Bluebird

        Even two professional incomes don’t cut it anymore. Want to live in a nice suburb within coowee of the city, your looking at close to $1M for a decent house (ok my idea of decent might be greater than yours).

        You can be on a combined income of 200K and it will still take you close to 30 years to even get close to paying off the 700-800 K mortgage.

      • %100 agree with you Flyingfox, $1m is the price of a house that vaguely reflects the hard yards put in to get the $200k. It’s not being precious or greedy at all.

      • +1 Pessimist. It takes significantly less after tax income to rent than to own. A rented home provides just as much shelter, security and family memories as a purchased one. Enjoy life without having a crippling mortgage over your head 🙂 Your tax is already subsidizing your rental costs via NG anyway, you might as well benefit from it.

        And if you feel like you’re missing out on the capital gains, you can always just take the IP route and do some NG yourself. Just bear in mind all the bubble risks do still exist around it though, and bubbles can only ever form when the market is unable to / refuses to see the actual risk.

        Or better yet – save the difference you keep due to the rent/own spread, and put it into other investments with higher liquidity, shortability and much lower transaction costs. You can NG those too!

        A large part of the problem is Australia’s obsession with home ownership.

        (Sorry reusachtige I know I’m sabotaging the plan to push the bubble over the edge!)

      • Phroneo: I recommend you buy – something. Start anywhere you can on the property ladder, as pointed out above, no need to live in it. Don’t listen to advice about not buying, think long term, one day you will be old despite being young now. You will not want to pay rent when you are old. Yes there is a risk of a ‘bubble popping’, nothing is without risk, and since you are young in all likelihood prices will still be way higher when you are old.

        I don’t like high prices any more than you do, but you gotta live in the real world.

      • “You will not want to pay rent when you are old.”

        Unless, of course, you’ve created an income stream for yourself via a lifetime of disciplined and diversified investing that comfortably covers your rent. Why shouldn’t you pay rent when you’re old? What’s the big deal about it? Strikes me as a far more rational and pleasant alternative than sinking every penny you have into a single asset class on insane leverage and pricing levels and praying that the market remains utterly deluded and the residential property cancer doesn’t devour its host at some point over the next 40 years. But maybe that’s just me…?

    • All depend
      If you plan to move house within 5 years
      No point buying a ppor (ip can makes sense sometime but you re not earning enough)

      If you plan to stay 10years, if you want a house it s pretty stupid not to buy one even at the max borrowing and get done with it, enjoy the ownership.

      • @mav,

        dont be a pussy, mortgages are not that hard to repay especially as they are reduced by inflation over the years, very very few people with mortgage struggle you know, and you can set up as interest only for say 10years and put all the extra in the offset, it would be become a lower repayment than your rent pretty fast(in case of emergency you can even get some repayment holidays (try asking that to your landlord).That s a part of being an adult.

        The thing if you move before 5 years is it going to be costly no matter what as the transaction cost are huge and you would get none of the money spent on home improvement back.

      • Mav, I recommend you discard all mathematical analysis and financial calculations.

        You should base your investment decisions on whether or not someone is likely to call you a “pussy”.

      • Arrow2, I can see through dam’s bravado.. he probably can’t sleep at night and that is why he comes on here and shows his insecurity.

        The other day, I asked him how much money (only as a %age of his loan to keep his fin. details private) he has in the offset account attached to his INTEREST ONLY mega mortgage. He gave every detail except answer the actual question!

        PS: Dam, renters are likely to loose jobs first, eh? Hilarious!! Even an halfwit would recognise that it is a dumb assertion.

    • Phroneo I’d protest and I’m sure there’s thousands of others locked out of housing who’d do the same. It seems government only listens to loud noises (and dollars)…

      • Same here. I am a young guy trying to buy a home for my young family. I earn a good income but what is happening is just ridiculous. Am considering a move overseas…possibly the US. I really don’t think anything will change here.

    • thomickersMEMBER

      there is no need to protest. just rearrange your finances/lifestyle to keep away from debt

  2. I used to despair about the spiraling cost of housing, but not anymore. Prices to the moon, I say. Give the spivs and the bogan landlords everything they want. 10% YOY growth? Pah! Pathetic. We can do 20% next year easily. And 25% the year after that. Let prices go so high that not a single person under 35 can afford even a one-bedroom flat 100km from the city. There will be a revolution.

  3. So, for the last year, national house price inflation is running at nearly 4x the CPI. If it was petrol prices, or grocery prices …or any other significant consumable, there would be national outrage, an inquiry….or a summit.

  4. It must be a blue moon. Today Tonight does some actual journalism on reposessions.

    One of the people repossessed said something like “I’m such an achiever, nobody can take this away from me”, now they are. God help me. I’ve noticed that’s a pretty common mentality, people getting these huge mortgages, and then they think they’re made.

    http://www.youtube.com/watch?feature=player_embedded&v=yy0fDtHolAc

    They say only 35% of us could pay the bills for a month if job losses occur.

    They also use the term “mega mortgage”!

      • What rubbish you speak, Dam.

        1. Renters are mobile and can easily move around in search of employment opportunities. They might be a more transient workforce but they also recover easier. It is homeowners who suffer the most when unemployment rises.

        2. What makes you think homeowners are somehow immune from job losses? Do you think companies check your assets before you get sacked? Electrolux has been in Orange since 1946. Do you think no-one working for them has ever bought a home?

        http://www.abc.net.au/news/2013-10-25/500-jobs-to-go-as-electrolux-plant-at-orange-to-close/5046580

      • flyingfoxMEMBER

        @dam yeah … tell that to the wall street guys during the GFC. They were the first to go … not that I have much sympathy for them.

        BTW your extremely gross judgements are really irritating.

        All established home owners aren’t rich (the bank owns the place) and everyone renting isn’t poor. It’s a choice. And if you were into specufesting and making the most of loopholes, you would never buy a PPOR. It makes much more financial sense to rent even if you invest the difference back into property.

  5. Reading the above comments, it seems those who say to buy expect housing prices to keep rising, even though you are buying at the peak of a bubble. Now of course, prices might keep rising, and no doubt the government will do anything and everything to keep them rising.

    But imagine taking on a humungous mortgage at low interest rates, and then for some unforeseen reason the bubble bursts. (Remember, it is a bubble.) Or interest rates rise. Or you lose your job. Or something happens in China and they start to pull their money out of Australian real estate.

    I’m not saying these things will happen, but never before has real estate cost so much. In Sydney, the average price for an ordinary house costs not much less than $1M with stamp duty and other costs. Melbourne is not far behind. Can we really expect to double in 7 years and double again 7 years after that? I know that when you’re buying a house to live in, you’re not thinking so much about capital growth – you just want to buy the maximum you can afford. But you still have to take all possible outcomes into account, especially when taking on such a huge commitment.

    • Mining BoganMEMBER

      See, the problem here is that you’re trying to put sane thoughts into insane minds. Never works. Ownership is a fervour that cannot be rained upon, except for one thing…the crash. Until then you’re wasting your breath.

      It is the proverbial teaching a pig to sing thing.

      • +1

        The other day, there was a survey which showed that almost half of the respondents thought the price would keep rising.

        So it will take some time for our bubble to reach its zenith (i.e., longer than many people on this site thinks).

  6. Great discussion. Excellent to finally see a little more balance arounf the topic. Really interesting how it polarises us so much.

    I’ve rented for years and now we own a place (well the bank owns most of it). I have to say that having our own place is just wonderful. I just want to say to those people who are thinking of buying that it can be done, and it doesn’t have to break your back. There are plenty of people on this site who will try to turn you off. Maybe their circumstances are different to yours.

    I would far rather be wrong and buy at the top of the bubbble (it’s a long term investment so I don’t care anyway) than be wrong and miss out completely.

    And if you don’t buy, you had better be super disciplined about saving your money, or you will be living in your mates basement (the one who bought 40 years ago) when you’re 70 and eating baked beans out of a can.

    I’d say that out of all the people who have bought a property (investors, owner-occupiers, whoever) in Australia, 7 out of 8 of them have had a positive experience.

    If you do buy, be smart and buy something near infrastructure. Schools and public transport are a must. Good luck. Remember that fortune favours the brave.

  7. Well, all us home owners need do is sell now and bank what we have, then wait for the property crash and bag some bargains. That’s hoping we get a crash soon. But because there is so much vested interest in real estate, any negative talk about receding house prices will become quickly muted and thats how the banks and both sides of government would like it to stay. Banks have lent to the hilt, it won’t be a gradual slow down but more like falling off a cliff onto jagged rocks.
    Our real estate values are artificially manipulated just like unemployment figures. If I had my way I would sell my house now and put my money on Gold while renting. This would be the safest scenario. You wouldn’t want to be sitting on cash if there were a real estate crash in this country because all the banks will be needing CPR to keep them alive.

  8. We should urge people to buy not to sell to help the RBA and the government pushing up house prices more to achieve their goal of busting more quickly