22/01/2013 - 15:38

Perth leads house price recovery

22/01/2013 - 15:38

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Perth leads house price recovery

Perth's housing market looks set for a strong recovery in 2013, with the median home price reaching a two-year high.

The RP Data-Rismark daily home value index for Australia's five largest capital cities was up 1.7 per cent compared to a year ago, with the median price of Perth homes up three per cent over the same period. 

CommSec chief economist Craig James said "given the strength of the West Australian economy, it makes sense that Perth is also leading the way on home prices in 2013." 

Mr James said the figures showed recent interest rate cuts and signs of improvement in the global economy had provided a boost for the housing market.

The Reserve Bank of Australia cut the cash rate a quarter of a percentage point to three per cent in December and has delivered 1.75 percentage points in cuts since November 2011. 

"The rate cut delivered in December certainly seems to be adding momentum to buying activity and thus prices," Mr James said.

"In addition, the more settled conditions on overseas financial markets and the gains on the domestic and global sharemarket have provided confidence to budding home buyers."

But he warned the resurgence of the housing market, following a weak couple of years, may put further interest rate cuts off the table.

"If demand for homes continues to lift over January, pushing up prices, the Reserve Bank will shelve any plans to cut rates," he said. 

"In fact the improvement in global financial markets over the past few weeks already points to the Reserve Bank leaving rate settings steady."

Real Estate Institute of Western Australia president David Airey said 2012 had finished on a positive note, with the December quarter the strongest of the year for turnover and growth.

“Now that buyers have more confidence and sellers are meeting the market with better pricing, the number of selling days has dropped from 71 to 62 for the quarter and this figure has been trending down for a while,” he said. 

Treasurer Troy Buswell also said today a 28 per cent increase in the number of Western Australians accessing the First Home Owners Grant in 2012 was "clear evidence" WA's property market was gaining strength.

 

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