Australian house prices leading the world

By By Kevin Eddy | www.brokernews.com.au, 24 June 2010

Australia's property market is one of the best-performing in the world, says a recent survey of global house prices.

Knight Frank believes Australian house price growth was the fourth-fastest in the world between March 2009 and March 2010, increasing by 20%. It was only outstripped by Singapore (24.3%), Hong Kong (30.6%) and key cities in China (68%).

However, Knight Frank injects a note of caution, saying that it believes the ABS is overstating actual underlying price growth as it does not take into account apartments and semi-detached housing. It also believes that the figure has been affected by both seasonal shifts in market activity and the increase in first-time buyer demand over the past year, thanks to the First Home Owners Grant.

It suggests that a more realistic figure is 12%, which has been driven by has been driven by "a confluence of factors; 40-year low interest rates, first-time buyer concessions, strong population growth and a lagging supply response". It also believes that price growth will slow over the next six to nine months as interest rate rises and the withdrawal of government incentives take hold, as well as increases in supply.