A new report has found that growth in house prices is set to slow in 2010 due to rising interest rates and falling housing finance figures.
The Australian Property Monitors’ Quarterly Housing report shows that national median house prices grew just over 3 per cent in March and there was an annual growth rate of 16 per cent, pushing the average national house price to $542,000.
A recovering economy and booming demand fuelled by population growth have offset the impact of five Reserve Bank of Australia interest rate rises pushing annual house price growth to a six-year high , Australian Property Monitors (APM) said.
Sydney has the highest average house price at $609,353 but Melbourne prices surged by 27 percent in the past 12 months. Darwin houses rose by 15.7 percent, while Canberra prices were up 13.9 percent.
Perth and Brisbane were the only two state capitals to register growth below 10 percent.
The median house price in Sydney is nearly 15 per cent above the level recorded a year ago, while Melbourne house prices rose 27 per cent.
Economist Matthew Bell from Australian Property Monitors says there will be a change in forthcoming months.
“We’ve seen the apartment market slow quicker than the house market and that’s because it is more affordable and more sensitive to those little changes,” he said.
“By the end of the year we’ll probably see house price growth come back to a level closer to the 8 to 10 per cent range, instead of the 16 per cent national level we’re seeing at the moment.”
He says rising interest rates and falling housing finance figures will have a greater impact as the year progresses.
“For the rest of the year I think we’ll see a bit of slowing of growth for the next couple of quarters,” he said.
“We’ve had five interest rate rises, we’ve had housing finance down for five straight months, and that’s eventually going to flow through to house prices.”