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REIA: Property prices reflect state economies

The median house price across Australian capital cities has risen by 4.1 percent for houses and 2.1 percent for other dwellings, the latest research by the Real Estate Institute of Australia (REIA) has found.

The REIA Real Estate Market Facts for the December quarter last year saw the average median house price for the eight capital cities at $743,496.

REIA president Malcolm Gunning said over the year, the median house price increased in all capital cities except Perth and Darwin, reflecting the differing fortunes of state economies.

“At $1,134,075, Sydney’s median house price is the highest among the capitals whilst Hobart retains the lowest at $430,000 – the figure is 42.2 percent lower than the national average,” Gunning said.

“The median price for other dwellings increased to $572,254 as median prices increased in Sydney, Melbourne, Hobart and Darwin.

“Whilst Hobart and Adelaide had the lowest median prices compared to other jurisdictions, over the quarter, Hobart had the largest increase in both the median price for houses at 6 percent and 11.7 percent for other dwellings.

“Over the quarter, median rents for houses remained steady or increased in all capital cities except Darwin.

In Brisbane, Adelaide and Perth median rents remained steady. Canberra had the largest increase at 9.5 percent followed by Hobart with an increase of 6.1 percent.

Median rents for other dwellings remained steady or increased in most capital cities except for Sydney, Perth and Darwin. In Melbourne and Canberra median rents for other dwellings remained steady.

“The weighted average vacancy rate for the eight capital cities decreased to 2.9 percent during the December quarter, a decrease of 0.2 percentage points. In most capital cities, the vacancy rates dropped by between 0.1 to 0.2 percentage points. In Hobart, the vacancy rate remained steady while in both Darwin and Canberra it increased. Darwin and Perth continue to have the highest vacancy rates at 7.8 percent and 6.4 percent respectively.

“Over the quarter, both investor finance and owner-occupied housing finance (excluding re-financing) showed strong increases of 8.8 percent and 11.1 percent respectively, after small decreases in the previous quarter.

“The level of investor activity is not unexpected when you consider that ten year average annual returns for residential investment property range from a low of 6.5 percent for houses in Perth to 10.5 percent for two bedroom units in Sydney with most returns being around 8 percent.

“This tells us why property is favoured above other forms of investment. It is the returns from housing investment that make it a preferred investment strategy noting that negative gearing is available for all asset classes,” Gunning said.

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June Ramli

June Ramli was a in-house journalist for Elite Agent Magazine.