What’s driving home price increases?

The average Australian home now costs around $546,500, according to a quarterly review released by the Australian Bureau of Statistics (ABS).

The ABS’ Residential Property Price Index (RPPI) released this month shows that Sydney continues to drive price increases, with a rise of 2.3 per cent in the March quarter 2014.

Established house prices for Sydney rose 2.4 per cent and attached dwellings rose 2.0 per cent in the quarter.

ABS Director of RPPI Robin Ashburn said while the quarterly growth in Sydney has slowed since the December 2013 quarter, house prices throughout the year in Sydney have risen 16.6 per cent and attached dwelling prices have risen 13.7 per cent - both the largest annual rises of all cities.

"For the weighted average of the eight capital cities, the RPPI rose 1.7 per cent in the March quarter 2014”, Ms Ashburn said.

“The index rose 10.9 per cent over the previous year, the largest annual increase since the June quarter 2010.”

The RPPI rose in Melbourne (up 2.1 per cent), Perth (1.1 per cent), Brisbane (0.8 per cent), Adelaide (0.7 per cent), Hobart (1.4 per cent) and Darwin (1.1 per cent). Canberra was the only city to record a fall, dropping 0.1 per cent.

"The rise in prices has contributed to a rise in the total value of residential dwellings to $5.1 trillion in the March quarter 2014”, Ms Ashburn said.

“The average value of Australia's 9.3 million residential dwellings was $546,500", she concluded.