Perth house prices surge 11.5%

The residential property sector in Perth appears to be on the cusp of another boom with a housing group forecasting a recovery in detached housing starts this year while a new house price gauge surged 11.5 per cent over the past year.

The Australian Bureau of Statistics today said the Perth house price index rose 5.7 per cent in the December quarter, the highest capital city growth for the period.

Over the year, the Perth index climbed 11.5 per cent.

Today's data confirms the upward trend as outlined last week by Australian Property Monitors which said the median house price in Perth rose 8.7 per cent to $512,000, while RP Data said the median price grew 6.5 per cent to $490,000.

Nationally, the ABS said the house price index rose 5.2 per cent in the December quarter, compared with an upwardly revised 4.4 per cent in the September quarter.

In the year to December, the house price index rose 13.6 per cent.

The median market forecast was for the house price index to have risen 3.5 per cent in the December quarter, for year on year rise of 11 per cent.

ABS' data coincides with the release of the Housing Industry Association's survey of Australia's largest builders, which said detached new home sales in WA fell by 8.2 per cent in December.

"The volume of new home sales fell by 5.2 per cent in CY 2009, but held steady in the second half of the year," HIA said in its report.

"Building approvals have tended to look stronger than new home sales and we are forecasting a decent recovery in detached house starts in 2010."

Nationally, new home sales fell 4.6 per cent in December as interest rates rose and first home buyers started to exit the market after the federal government's home owners boost was rolled back.

Over the year, new home sales increased by 7 per cent nationally.

Meantime, mortgage broker AFG has warned the Reserve Bank of Australia that another interest rate rise would deliver a "crippling blow" to the housing market.

The RBA is widely expected to lift the official cash rate by 0.25 per cent to 4 per cent.

AFG, which has 10 per cent of the country's mortgage market, said it arranged $1.5 billion of mortgages in January, 47 per cent less than the $2.9 billion it arranged in September.

"We've seen a lot of data recently about rising house prices and increasing consumer confidence, all of which would suggest buoyant property markets," AFG managing director Brett McKeon said.

"But the opposite is the case."

"The drip feed of rate rises is like water torture - people are anxious about when the next one is coming and how big it will be. Uncertainty about the future of rates is draining confidence out of the market."

In WA, AFG arranged 864 mortgages in January, totaling $335 million at an average size of $388,000.

Of the mortgages arranged, 11.6 per cent were for first time buyers while 34.3 per cent were for investors.

This compares with 1,049 mortgages arranged in December, totaling $409 million, with 15.8 per cent first time buyers and 30.6 per cent investors.