Healthy start to 2010 for housing market - RP Data

By By Turi Condon, From: The Australian, 27 February 2010

AUSTRALIAN house prices have made a strong start this year, defying the threat of rising interest rates.

Melbourne and Adelaide led the way, recording January increases of up to 4.3 per cent, The Australian reported.

Nationally, house prices grew 1.8 per cent during the first month of the year, translating to an 11.8 per cent jump over the past 12 months, according to residential researcher RP Data-Rismark's home value index.

In Sydney, values increased 1.7 per cent to a median price of $494,500, Melbourne rose 4.3 per cent to $455,000, Brisbane 1.8 per cent to $440,000, Adelaide 3.2 per cent to $379,600, while Perth prices fell 0.6 per cent to $472,500.

Prices continued rising despite Reserve Bank rate rises in October, November and December, and additional increases from the banks that, combined, have lifted the average mortgage rate from 5.8 per cent to 6.65 per cent.

The latest figures come ahead of next week's Reserve Bank board meeting, with economists expecting interest rates to increase up to one percentage point this year.

RP Data noted price rises in December were lower, suggesting the pace of price growth was easing.

However, RP Data's head of research, Tim Lawless, said there was confidence in the housing market. "Buyers are for the time being outweighing sellers and new supply is being quickly consumed," Mr Lawless said.

"With rental demand likely to be higher during 2010 due to continuing strong migration and fewer first-home buyers, we anticipate that rents, and consequently yields, will improve over the year," Mr Lawless said.