RP Data: Strongest house price growth in 18 years

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By Leith van Onselen

Following yesterday’s post on RP Data’s March house price results at the 5-city level, calculated from its daily index, RP Data has today issued its Media Release, which includes results for the other capitals, namely: Hobart, Canberra and Darwin (see below table).

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As you can see, values rose by 2.3% at the 8-city level, with values increasing across all states and territories.

It was the strongest monthly gain in housing values in the series’ 18-year history, eclipsing the previous record of 2.2% growth in August 2001.

According to the Media Release:

…half of all Australia’s capital cities are now posting record high dwelling values, with Sydney’s housing market showing the most substantial increase beyond its previous market high…

“Dwelling values increased by just 2.9 per cent over the first twelve months of the cycle, however, since last June, values are up by close to 13 per cent. Over the long term, I don’t believe such a strong pace of growth can be sustained – we expect housing market conditions to cool down as the year progresses.  If the pace of capital gains doesn’t slow, we may see higher interest rates realised much earlier than previously expected,” Mr Lawless said.

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Rental yields are also beginning to worsen, with Melbourne’s looking especially particularly poor:

According to Mr Lawless, gross rental yields have been falling since June 2013 when the pace of dwelling value growth picked up substantially.  While capital city home values are up 12.5 per cent since May last year, weekly rents have increased by just 1.8 per cent.

“The bi-product of this disconnection in growth rates is that yields have been eroded consistently lower.  The situation is worse in Sydney and Melbourne.  Since May last year Sydney home values are up 17.3 per cent while rents have moved by only 3.5 per cent.  Similarly in Melbourne, since May last year dwelling values have risen by 14.6 per cent while rents have crept only 1.5 per cent higher.  Melbourne and Sydney are showing the lowest gross yields of any capital city at just 3.3 per cent and 3.8 per cent gross respectively,” he said.

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Full release here.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Comments

  1. reusachtigeMEMBER

    Go you good thing! This really is good news. Now just a little bit more, and steeper!

  2. All good, nothing to see here just move along please.

    Like the rising A$, the RBA will sort this out in due course!

  3. Hang on – I remember reading that median house prices in Sydney were $750,000 a few months ago. Now they are $680,000…

    In fact I have read median house prices in Sydney are anywhere between $680,000-$770,000 depending on who is telling the story at the time…

    In fact the figures seem to change everytime you read one of these things….

    What gives?

    • Your overly irresponsible use of facts or spotting of them.

      reusachtige shall be along in a moment to put you back in your place.

    • Tiliqua scincoidesMEMBER

      There’s no way it’s as low as $680 for a “house”. You can barely get a decent apartment for that. My brother sold a 2br unit in the last few weeks for $720k.

      I would say the median house price is definitley north of $750K.

      • Median house price in Sydney now $818k according to RP data.

        Must be time for another FHB grant to help get new buyers into the market…

        Or perhaps we should let them use their super to fund the deposit…

        Or perhaps we need to cut interest rates…

        Got to do something to help them “get on the ladder.” How else are the poor souls supposed to hold a conversation at their local BBQ.

      • Maybe not. Do a few Domain searches on western and south western suburbs of Sydney.

        There is a lot of population there and it counterbalances the eastern suburbs, lower north shore and inner west.

        “Campbelltown Trends – Houses
        Median Price $346,000
        Days on market 48
        Discounting 4.8%”

      • outsidetrader

        That’s a relief Explorer – for a minute there I was worried there might be a housing bubble…

  4. Who in their right mind would but a property with a gross yield of 3.3% when they could purchase bank stocks at 6% fully franked?

    (I wouldn’t buy either but not the point…)

    • Tiliqua scincoidesMEMBER

      Pople who bought 12 months ago might have a diferent view given that their asset has increased in value by 15%.

      Property never decreases in value remember.

      • House prices have been “about to burst” for more than a decade now. I wouldn’t hold my breath.

      • reusachtigeMEMBER

        Have you got enough breath for another decade of “house prices are surely about to crash”? Big lungs eh?

  5. If nothing else shows the resiliance of house prices to all factors its Canberra. Job losses, low confidence, no population growth, no income growth = rising house prices. And even accelerating prices over the last month and quarter!
    This is Pythonesque – everything is just a flesh wound, you can’t kill it.
    Prices to infinity – and beyond!

    • JohnsonMMEMBER

      I thought that exactly.

      Workplaces accelerating layoffs, apartments being erected left, right and centre, promotions and future employment prospects dead in the water.

      And rising asset prices!

      Entertaining anyway 😛

      • reusachtigeMEMBER

        There are people buying all those places so job losses are irrelevant. Next counter-point please…

      • JohnsonMMEMBER

        Lol I suppose they must be!

        Who needs a job to buy a house anyway? That’s so 1970s. Now it’s all equity-mate!

  6. These various figures make no sense to me. How can they print that prices are $630,000 in Sydney here and in the press and then they be $800,000 somewhere else…

    There is such a wide band being floated around it is hard to believe these stats are totally above board…

    I would love to see the revised ABS data, or NSW State Gov breakdown (it is hidden in the back of their website)

    • It says – Dwelling price – which I take to mean it includes units as well as houses. The other reports with higher numbers would be referring specifically to detached houses.

      Either way, they are all insanely expensive for anyone on a regular income.

  7. Residex, state market report Sept 2013, Sydney median house price $741k. Units $514k. Median dwelling price of both is, $627k.

  8. Sydney has a long housing bow yet to come, Median increase over 10 years only 3.1%.

    Catch up time.

  9. Yeah but this is the actual release. People were saying median house prices in Sydney were up over $750,000 late last year – now they are $713,000 according to RP Data and things are “going through the roof”

    There is not some level of BS going on with the data from these outfits?

    Are they not choosing to report exactly that they want to so as to create a sense or urgency???

    Capital Growth to 31 March 2014 Sydney Melbourne
    Brisbane –
    Gold Coast Adelaide Perth
    Australia 5
    Capitals
    (ASX) Hobart Darwin Canberra Brisbane
    Australia
    8 Capitals
    Table 1A: All Dwellings
    Month 2.8% 2.3% 2.7% 1.4% 0.6% 2.3% 1.2% 3.3% 2.2% 2.9% 2.3%
    Quarter 4.4% 5.4% 1.9% 1.2% -0.6% 3.5% 4.7% 2.8% 2.0% 1.5% 3.5%
    Year-to-Date 4.4% 5.4% 1.9% 1.2% -0.6% 3.5% 4.7% 2.8% 2.0% 1.5% 3.5%
    Year-on-Year 15.6% 11.6% 5.0% 4.6% 4.7% 10.8% 0.9% 3.8% 1.7% 4.8% 10.6%
    Total Return Year-on-Year 20.5% 15.7% 10.1% 9.2% 9.4% 15.5% 6.3% 10.4% 6.4% 9.8% 15.2%
    Median price* based on settled sales over quarter $630,000 $515,000 $435,000 $390,000 $515,000 $505,000 $338,000 $547,000 $526,000 $435,000 $510,000
    Table 1B: Houses
    Month 3.0% 2.3% 3.2% 1.4% 0.6% 2.4% 0.8% 5.1% 2.4% 3.3% 2.4%
    Quarter 4.8% 5.8% 2.1% 1.0% -1.0% 3.7% 3.7% 3.5% 2.0% 1.7% 3.6%
    Year-to-Date 4.8% 5.8% 2.1% 1.0% -1.0% 3.7% 3.7% 3.5% 2.0% 1.7% 3.6%
    Year-on-Year 16.4% 11.9% 5.5% 4.9% 4.5% 11.0% 0.7% 4.2% 1.6% 5.1% 10.7%
    Total Return Year-on-Year 21.2% 15.9% 10.6% 9.6% 9.1% 15.6% 6.2% 10.8% 6.3% 10.1% 15.3%
    Median price* based on settled sales over quarter $713,000 $555,000 $475,000 $411,750 $533,750 $535,000 $376,000 $575,000 $562,875 $460,000 $535,000
    Table 1C: Units
    Month 2.0% 1.9% -0.6% 1.1% 1.1% 1.6% 5.7% -4.4% -0.3% -0.7% 1.6%
    Quarter 2.9% 2.5% 0.0% 3.7% 4.0% 2.6% 15.1% -0.1% 2.4% 0.3% 2.7%
    Year-to-Date 2.9% 2.5% 0.0% 3.7% 4.0% 2.6% 15.1% -0.1% 2.4% 0.3% 2.7%
    Year-on-Year 12.2% 8.9% 0.4% 0.8% 8.6% 9.2% 2.4% 2.3% 3.1% 1.7% 9.4%
    Total Return Year-on-Year 17.7% 13.8% 6.0% 5.8% 14.0% 14.5% 7.9% 8.8% 8.7% 7.5% 14.8%
    Median price* based on settled sales over quarter $552,500 $448,000 $359,000 $330,000 $430,000 $445,000 $252,500 $471,000 $415,000 $368,000 $451,500
    Table 1D: Rental Yield Results
    Houses 3.8% 3.3% 4.6% 4.3% 4.2% 3.8% 5.2% 5.9% 4.3% 4.5% 3.8%

  10. UE,

    There’s something seriously wrong with the RP Data releases. This release of March 2014 covers the first quarter. It says the median price in Melb is $515,000 which is supposedly a 5.4% increase over the quarter.

    If you look at the previous release in Jan 2014 which covers the last quarter of 2013.

    http://www.scribd.com/doc/195092877/RP-Data-Rismark-Home-Value-Index-2-January-2014MediaRelease

    http://www.macrobusiness.com.au/2014/01/rp-data-december-update/

    It said that the median price of Melb was $563,000

    How is $515,000 a 5.4% increase ?

    Am I reading it wrong ?

  11. According to the last quarterly RP Data release Sydney house prices were $775,000 now they are $717,000 perhaps they should report that one Sydney property is crashing!!!

  12. You are right, the numbers on rp data are wrong,
    I would suggest you stick with one data supplier, they use different methods of calculations, have a look at Residex, They stack up Quarter to quarter.

    Melbourne house median end Sept 13QTR, $591k.
    Melbourne house median end Dec 13 QTR, $610k 3.22% increase.

    You will just have to wait for current QTR release.

    http://investors.onthehouse.com.au/statemarketreports#.Uzpc4suKAhk

  13. Yeah but they are a major data supplier quoted in the mainstream media and can even do simple arithmetic I noticed it with a cursory glance –

    So I do stick with one data supplier and what they are saying is house prices are dropping big time

    There is something MAJORLY wrong here…

    • You make a good point.

      I’ve seen the data coming out of Auction results becoming really ‘dirty’. Seen some Houses that were passed on vendor bid, listed as auctioned.

      Seem’s like even RP Data is becoming poisoned.

      I guess we’ll need to wait for the data that come out of settlement figures.

      • Not an expert, but I think that if a place sells on the day of auction, even after being passed in at the actual auction, then it counts an an auction sale.

        Tell you a true story though…. saw a place (with my own eyes naturally) sell at auction for 847. If you check it out now, says it sold for 870. Pigs arse it did.

  14. Andrew 1234 “There is something MAJORLYwrong here..”

    No there is not. You are looking for “animal spirits” from the info. So Neanderthal- hunter gatherer type info from the past.

    “Housing Spirits” are modern and the bedrock of Australian civilisation.

    So is it circa $650k or $750k? The former of course–buy the dip! As soon as you move in, have a night of passion and when you wake up in the morning it is the latter. The Housing Spirits have blessed your abode.

    But wait there is more.Because you bought the dip, why not renovate the already renovated house? This truly arouses the Housing Spirits and your blessings will be many.

    All you have to do is consult your medium,er, banker ,who will consult with the Housing Spirit Lords, using the ouija board or modern obsidian lens i.e stats on the ipad.

    Stats. maths. econ. etc., we all know that the mediums still communicate in this ancient form to pacify the old peoples from the animal spirit age.

    You only have to look at the grand visage of Reusachtige and be embraced by his noblese oblige.

    A true hero for the new ages, forged in the image of Raglan, Lucan and Cardigan.

    Reusachtige for Governor General.

    So trouble yourself no more.

  15. Ok – well I would just suggest anyone who is really interested simply go to RP Datas site, go to media releases click on the one from yesterday and the one from Jan 2nd – print off the PDFs from the two releases…

    Compare the numbers (this will take five mins)

    And then begin to ask some serious questions…