House prices rise 6%, new home sales dip

The rental market is expected to come under pressure as new data out today shows the median house price in Perth has climbed 6 per cent in the year to October while sales of new homes fell.

According to the RP Data-Rismark National Capital City Hedonic Index, median dwelling values in Perth reached $498,541 in October, up 0.51 per cent on the previous month and up 6.11 per cent on the year to end of October.

Nationally, the median dwelling value rose 1.4 per cent in October and 9.95 per cent in 2009 to $496,398.

The best performing capital city was Melbourne where home values jumped 14.9 per cent in the first ten months of 2009 to $481,247, while Adelaide was the weakest performing city where values fell 4.6 per cent to $413,152.

"The strong growth figures throughout October after a slowdown in September show that the market is very resilient and that the 25 basis point interest rate increase during the month has not immediately impacted the market," RP Data senior research analyst Cameron Kusher said.

The median value of a home in Perth rose 5.94 per cent in the first ten months of 2009 to $505,954 while the median value of a unit grew 6.82 per cent to $471,331.

Units in Perth also had the shortest average number of days on market at 19.

Yield results for October were 3.98 per cent for houses in Perth and 4.41 per cent for units.

Mr Kusher said the likeliness of further interest rate rises over the next 18 months is likely to result in more normal growth conditions.

"The removal of the First Home Buyers Grant Boost and higher loan costs will also result in greater pressure on the rental market," he said.

Meantime, data out from the Housing Industry Association showed detached new home sales in WA fell 3.4 per cent in October, compared to 6.9 per cent nationally.

"Sales activity from investors and upgrade owner occupiers has not chimed in to offset weakening first home buyer-related activity," HIA chief economist Harley Dale said.

"A decent and sustainable new home building recover needs strong momentum from private sector trade-up buyers and investors and we seem to be falling short on that score as we near the end of 2009.

"Indeed, given the narrowly based private sector recovery, costly delays in planning approvals, and reports of land shortages beginning to re-emerge, it is looking like 2010 will be a year where the number of new homes built will fall well short of what is required to match Australia's rapidly growing population.

"The majority of the increase in housing starts next year will be driven by the social housing program which is not pulling the private sector along with it."