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Latest figures show signs of recovery in Australian property markets

Nationally property prices declined by just 0.5%, according to the RP Data-Rismark National Property Values Indices. And in the nine months to September the 30, Australian property values have been largely resilient, tapering only 1.4%.

RP Data-Rismark International managing director Christopher Joye said the disconnect between housing demand and supply will positively impact house prices in the future.

'Looking ahead we need to produce 190,000 homes annually but the supply-side is only currently delivering about 145,000 homes per annum,' he said.

'Some economists are forecasting that the supply shortage will grow to 200,000 properties by 2010. This means that Australian house prices will almost certainly rise over the medium to long-term,' he added.

Mr Joye said if valuations increase in line with nominal gross domestic product (GDP), property values will be around 80 to 90% higher in a decade and housing affordability is also set to improve significantly in the near-term.

Interest rate cuts combined with the Government's $10.4 billion worth of fiscal stimulus is expected see household disposable incomes after interest costs rise robustly over the next year.

The RP Data's subscriber base, which includes around 70% of real estate agencies across the country, is already reporting an increase in enquiries, particularly in the lower-priced segments of the market.

City by city, Adelaide remains the strongest performer with property values up 3% this year and 7.8% over the 12 months to September 30. It is regarded as the most affordable mainland capital city.

Darwin continues to record the highest gross rental yields of any capital city, with houses returning an average of 6.42% and units returning 6.56%.

Perth remains the worst performer with poor dwelling values and rental yields, but the city's units are still the most expensive of any capital city while Sydney is the only market to have recorded an increase in dwelling values during the September quarter and rental yields are also strong.

In Brisbane and Canberra dwelling values are lower, while in Melbourne residential markets have remained virtually flat.

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