The latest figures from the Australian Bureau of Statistics show that while prices are still on an upward trajectory they are not growing as fast as they were a year ago.
This means that prices are easing back to a more sustainable pace, according to the Housing Industry Association (HIA), the voice of Australia’s residential building industry.
‘Capital city residential property prices grew by 1.7% during the June 2014 quarter. While this pace was slightly faster than in the March quarter, this growth is more modest compared with what occurred during mid to late 2013,’ said HIA economist, Diwa Hopkins.
‘During that period, residential property prices were increasing between 2% and 4% per quarter. While it’s too early to call a trend, the signs are mounting that price growth is easing back to a more sustainable pace,’ she explained.
She pointed out that annual growth reached what looks to be a cyclical peak rate of 10.9% in the March 2014 quarter. This rate eased back to 10.1% per annum in the June quarter.
Residential property prices in Sydney continue to grow the most rapidly, in both quarterly and annual terms but growth rates remain highly divergent across the different capital cities.
‘Steady and sustainable price growth reinforces confidence in the market and is a key ingredient to achieving healthy levels of new home building activity. We expect starts to break through 180,000 in 2014, following nearly 170,000 last year,’ said Hopkins.
‘Continuing improvements in the supply of new homes will be important in taking some of the momentum out of house price pressures, and we may already be seeing early signs of this,’ she added.
A breakdown of the figures show that over the June 2014 quarter, residential property prices increased fastest in Sydney with growth of 3.1%. In Brisbane they increased by 1.8, in Melbourne by 1.3% and in Adelaide by 1%.
Canberra saw prices increase by 0.8%, Darwin by 0.7% and Hobart by 0.3% while prices fell in Perth by 0.3% during the June 2014 quarter.
Hopkins also pointed out that the ABS Residential Property Price Indexes may be discontinued as part of reductions to the ABS work programme and said this was a blow to the real estate industry.
‘There have already been significant cuts to data provision for the housing industry in recent years. At a time when governments and businesses need more not less official information about economic conditions, the reduction in ABS data represents a cost to the economy, not a saving,’ she said.
