House prices on the mend

Friday 29 May 2009

Article by Mozo

The Australian housing market has rebounded in a sprightly fashion in the first four months of this year, a report from RP Data has found.

According to the group, the dismal drop in house prices seen last year has been almost entirely rectified, with average house prices rising a "healthy" 2.8 per cent since January.

In 2008, house prices fell three per cent, with the financial crisis hastening the downward spiral.

Although many quarters will welcome the signs of recovery, sceptics may well claim that the figures are evident that the first home buyers grants and the abundance of low interest home loans are simply inflating the housing market.

Indeed, Rismark International managing director Christopher Joye explained: "Home values in Australia’s mortgage belts, which are the prime first home buyer markets, were flat or falling between 2004-07 while the inner city and affluent markets enjoyed consistent growth. In 2008-09 we have seen a reversal of these fortunes."

One of the main criticisms of the first-home buyers grant schemes has been that the extra cash has been absorbed by developers which are overvaluing new build properties, making new homes no more affordable for the average buyer.

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