House prices increase 1.1% during July

Australian house prices increased by 1.1% during July and are up 2.2% over the last 12 months, according to new figures from research firm Residex .

The figures mean Australian house prices have recovered all losses from 2008 and now stand at a record high.

Sydney recorded the largest increase, with prices rising by 2.7% for the quarter. Prices have increased 4.2% for the year, with a median house price of $593,000. It is the fastest growth for the city since 2002.

Melbourne prices also increased by 1.2% for the quarter, and 3.7% for the year, with a median price of $498,000. The city has enjoyed the highest auction clearance rates out of the main capital cities in the last few months.

Prices in Adelaide increased by 0.9%, with a 2% growth rate for the year, with a median price of $382,500.

However, prices in Brisbane remained flat during July, with a 1% increase for the year and median price of $452,000. Perth was the only market to struggle, with prices declining 1.3% in July, and down 7% during the year, at a median price of $469,000.

Westpac senior economist Matthew Hassan believes the weak results in Perth and Brisbane, and the relatively strong results in the south-eastern states, could be pinned on the downturn.

“The obvious culprit is that the downturn’s effect on the resources boom has affected Perth and Brisbane more than the other states…but beyond that, it’s not too certain. We’d love to see some data about migration. Both states have had strong migration, and perhaps it could be that inflow has stopped or perhaps even reversed. Certainly in Perth, and to a lesser extent Brisbane, we have seen loosening rental vacancy rates.”

Housing Industry Association senior economist Harley Dale says Australian property has survived the downturn remarkably well.

“I think it’s probably too early to call this result as anything other than yet another piece of evidence that we haven’t crashed through the floor. I think you’ll inevitably see differences and several different magnitudes against different housing prices measures, but I think the main thing is that we’re in mid 2009 and still seeing house price growth rather than house price corrections.

Dale says first home owners are continuing to take advantage of Government grants, and that “you’ve still got a fair degree of activity in that market…which is helping the market overall.”

Unit prices increased by 1.3% during July, with a 4.5% growth rate for the year, with all main capital cities except for Perth recording unit price rises.