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The RBA will need to exercise caution in raising interest rates to avoid extreme housing unaffordability in Australia
Housing affordability continues to be an issue in Australia, as reflected by the latest figures.
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According to RP Data, median house prices shot up in Melbourne and Sydney over the quarter by 4.99 per cent and 1.9 per cent respectively.
Climbing house prices continue to impact home loan borrowers. While total owner occupier finance commitments increased by 1 per cent during August, they remain 22.8 per cent down over the year.
Finance commitments for new construction and the purchase of new dwellings were also down in August by 1 per cent and 2 per cent respectively, according to the Australian Bureau of Statistics (ABS).
Meanwhile, investors are increasingly seeking property priced below median values. For example, the Real Estate Institute of WA reported a drop in Perth's median house prices by 4 per cent over the quarter due to investors opting for lower value properties.
Affordability issues continue to blight the first home buyer sector, as housing finance commitments fell by 2.5 per cent in the month of August - a fall of 49.3 per cent for the year, putting first home buyer commitments at their lowest since January 2005, according to RP Data research.
Moreover, land sales eased in most Australian capital cities over the June 2010 quarter, according to the latest residential land report from the Housing Industry Association (HIA).
And despite the RBA surprising the industry by leaving the cash rate unchanged earlier this month, there is a concern that the RBA will need to exercise extreme caution when considering future rate hikes.
Residex chief executive officer John Edwards says while unaffordability is not at its worst position, it is "getting there".
Mr Edwards says it will not take too many interest rate increases to reach the point where the Reserve Bank would need to seriously evaluate the impact on housing affordability in Australia.
RESIDENTIAL PROPERTY - LATEST FIGURES
DARWIN:
Median house price: $530,000
Quarterly growth: -0.93%
Annual growth: 17.05%
Average annual growth: 11.56%
Median weekly rent: $520
Gross rental yield: 5.10%
Median unit price: $399,138
Quarterly growth: -0.22%
Annual growth: 16.92%
Average annual growth: 9.61%
Median weekly rent: $410
Gross rental yield: 5.34%
PERTH:
Median house price: $492,000
Quarterly growth: -2.57%
Annual growth: 11.24%
Average annual growth: 12.68%
Median weekly rent: $380
Gross rental yield: 4.02%
Median unit price: $415,000
Quarterly growth: -2.12%
Annual growth: 12.33%
Average annual growth: 13.02% Median weekly rent: $330
Gross rental yield: 4.13%
ADELAIDE:
Median house price: $405,000
Quarterly growth: 1.25%
Annual growth: 10.64%
Average annual growth: 11.28%
Median weekly rent: $315
Gross rental yield: 4.04%
Median unit price: $340,000
Quarterly growth: 3.03%
Annual growth: 89.14%
Average annual growth: 11.96%
Median weekly rent: $275
Gross rental yield: 4.21%
MELBOURNE:
Median house price: $505,000
Quarterly growth: 4.99%
Annual growth: 19.90%
Average annual growth: 10.11%
Median weekly rent: $350
Gross rental yield: 3.60%
Median unit price $432,500
Quarterly growth: 2.49%
Annual growth: 16.34%
Average annual growth: 8.88%
Median weekly rent: $340
Gross rental yield: 4.09%
BRISBANE:
Median house price: $465,000
Quarterly growth: -2.62%
Annual growth: 10.12%
Average annual growth: 11.35%
Median weekly rent: $370
Gross rental yield: 4.14%
Median unit price: $380,000
Quarterly growth: 1.27%
Annual growth: 5.63%
Average annual growth: 8.31%
Median weekly rent: $355
Gross rental yield: 4.86%
SYDNEY:
Median house price: $591,000
Quarterly growth: 1.90%
Annual growth: 19.98%
Average annual growth: 8.56%
Median weekly rent: $450
Gross rental yield: 3.96%
Median unit price: $451,000
Quarterly growth: 2.50%
Annual growth: 11.69%
Average annual growth: 5.57%
Median weekly rent: $410
Gross rental yield: 4.73%
CANBERRA:
Median house price: $540,000
Quarterly growth: -3.57%
Annual growth: 15.22%
Average annual growth: 11.94%
Median weekly rent: $470
Gross rental yield: 4.53%
Median unit price: $415,000
Quarterly growth: -1.19%
Annual growth: 9.70%
Average annual growth: 11.49%
Median weekly rent: $400
Gross rental yield: 5.01%
Source: RP Data
BUILDING APPROVALS
TOTAL DWELLING UNITS APPROVED
August 10: 13,049
Change from July 10: Decreased by 4.7%
Change from Aug 09: Increased by 4.4%
TOTAL PRIVATE SECTOR HOUSES APPROVED
August 10: 8,208
Change from July 10: Decreased by 4.3%
Change from Aug 09: Decreased by 10.3%
TOTAL PRIVATE SECTOR OTHER DWELLINGS APPROVED
August 10: 4,313
Change from July 10: Increased by 1.4%
Change from Aug 09: Increased by 66.8%
Source: ABS
