Australian house prices rise, while interest rates are tipped to remain low
Article by Mary Ward
House prices are continuing to rise, the latest Domain Group’s House Price Report has revealed, with most capital cities seeing an increase in price growth over the December quarter.
The report showed the national median house price increased by 2.1% over the period, while the national median unit price increased by 1.7%.
Those figures contributed to a 7.1% increase in house prices, and a 6% increase in unit prices, over 2014.
Most of the growth came from the Sydney market (where the median house price increased by 4.1% over the quarter), although all but one of the country’s capital cities recorded growth over the quarter (Darwin recorded the only loss: a decline of 6%).
“Declining local economic performance continues to impede housing market activity in Darwin and Perth, however Perth did experience a modest increase of 1% for houses and 0.6% for units over the quarter,” said Domain Group economist Andrew Wilson.
The data comes after the Annual Demographia International Housing Affordability Survey showed that Sydney house prices were the third-most unaffordable in the world. Melbourne didn’t fare much better, with Australia’s second-largest city named the world’s sixth-most unaffordable.
However, it isn’t all bad news for those looking to buy a home in 2015.
While the price of property remained high, the annual rate of inflation fell sharply, prompting the Housing Industry Association to predict interest rates will remain low for the foreseeable future.
The headline rate of inflation dropped to 1.7% during the December 2014 quarter, the lowest rate since 2012.
“Fewer price pressures in the economy mean that a policy of very low interest rates is both justified and necessary,” Housing Industry Association economic Shane Garrett said.
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