Homebuyers are moving off the sidelines and back into the market, according to new data released this week.
The February RP Data/Rismark home value index results show that the Australian housing market has weathered the past twelve months well, with five of the country’s capital cities recording growth.
Capital city dwelling values rose by 0.3 per cent nationally to the end of February 2013, following a rise of 1.2 per cent in January.
The strength in the monthly result was largely driven by Australia’s second largest housing market, Melbourne, where dwelling values were up by 1.5 per cent.
Values also appreciated across Sydney (up 0.1 per cent), Canberra (1.9 per cent) and Darwin (2.3 per cent), while the remaining capital cities recorded a fall in values.
Brisbane recorded the largest month-on-month fall with values down 1.1 per cent after rising 2.0 per cent in January.
On a quarterly basis every capital city of Australia, apart from Adelaide and Darwin, has recorded a rise in dwelling values.
The largest increase over the past three months has been in Hobart where dwelling values are up 4.2 per cent. Canberra (2.3 per cent) and Melbourne (2.2 per cent) also stand out as showing a solid jump over the past three months.
“In an environment of significantly improved consumer confidence, the housing market is responding positively to almost record low monetary policy settings”, Rismark International Managing Director Ben Skilbeck said.
“A recent statement by the RBA Governor and the House of Representatives noted that lending rates have fallen to levels not far from their historic lows and the share of household income devoted to interest payments has declined considerably while housing affordability, as conventionally measured, has improved a lot over the past two years.”
According to RP Data research director Tim Lawless, most housing markets bottomed out around May last year and since that time the combined capital cities index has recorded a 3.3 per cent improvement in values.
“While the housing market is staging a demonstrable recovery, we need to see values rise a further 4.3 per cent before we can say that a technical recovery has been achieved”, Lawless said.
“That amount of value appreciation is likely to be at least six months away.”
Unit markets are generally showing a stronger performance compared to detached houses. Over the past year, unit values across the combined capital cities index have increased by 2.3 per cent compared with 1.2 per cent gain in house values.
According to Mr Lawless, there are several other factors reflecting a more positive housing market, such as higher auction clearance rates and vendor discounting, suggesting that buyer and seller expectations are becoming more evenly balanced.