‘This top end recovery has been completed in most capitals, with median house prices surpassing pre-global financial crisis highs for the first time in the December quarter in Sydney, Brisbane, Adelaide and Perth,’ he added.Bell said the extent of last year’’ median house price growth had come as a surprise as no one foresaw the economic recovery being so strong and that fueled the top end of the market. The fact that the December quarter was as strong as the three months earlier was also surprising. ‘The December quarter was a surprise. There is an indication that not only was there a general price rise, but the more expensive properties were selling as well,’ he said.

These figures should come as no surprise. With historically low interest rates and improving job prospects the market was always set to rebound quickly.

The question now is what impact sharply rising interest rates will have on the market.

Today’s ABS score of the average established house in the state capitals jumping 5.2 per cent in the December quarter and 13.6 per cent over 2009 will do as an illustration. And remember that the best of the first-home buyer incentives were already washing out of the market in the December period. Annualise that December quarter figure if you dare.

Perversely, it’s the promise of a housing bubble that is sucking investors back into the market as well as panicking would-be owner-occupiers into taking the plunge. And it’s the reality of a housing bubble that will help force up interest rates.

It’s not only Crikey that’s claiming a looming housing bubble. Here Michael Pascoe argues that the three major property monitors all show an over-heated market. And that will lead to interest rate increases.

The question is, what advice are you giving to buyers and sellers?

According to a report on the ABC economic factors pushed the Australian property market lower in December despite a positive year-to-date performance.

Australian capital city home values slipped 0.3 per cent in December, but still recorded 11.5 per cent growth over the year.

The data from real estate analysts RP Data and funds manager Rismark shows that the median Australian dwelling (including houses and apartments) was worth $451,000.

RP Data’s research director, Tim Lawless, says the typical summer slow-down, as well as changes to monetary policy and the reduction of Federal Government grants saw the residential property market soften at the end of last year.

“We have seen interest rates of course going up which has dampened demand somewhat,” he said.

The report went on to claim that Perth had the lowest rental yield of all the capital cities.

CANNING Vale was in demand in 2009, with more houses sold in that suburb than any other, but Guildford delivered the biggest median house price rise.

Landgate Valuation Services’ figures show Canning Vale was way out in front with 506 houses sold, ahead of Thornlie with 340 and Ellenbrook with 330.

Real Estate Institute of WA president Alan Bourke said the result was to be expected because of the first homebuyer’s boost stimulating outer-metropolitan suburbs.

Business migrants Roland and Lina Ting said they decided to rent when they arrived in Australia in 2008 to see what Perth’s property market was like.

“Having stayed (in Canning Vale) about a year we decided it was a very good suburb,” Mr Ting said.

The couple moved their three children, Melissa, 20, Stephanie, 17 and Nicholas, 16, into the property they bought in August last year.

“We looked around a lot of suburbs and found Canning Vale was a newer suburb — more organised. It didn’t have neglected gardens, was very family-friendly and peaceful.”

The best performing suburbs in terms of median price rises last year were Guildford, Mt Richon and Victoria Park.

From 2008 to 2009, Guildford saw a rise in its median house price of 17.26 per cent, from $565,000 to $662,500. The median in Mt Richon increased 16.86 per cent from $422,500 to $493,750, and Victoria Park’s median increased 15.65 per cent, from $575,000 to $665,000.

The suburbs whose median prices were hit the hardest were North Beach, with its median price falling 35.38 per cent ($1.22 million to $790,000), Ascot, which fell by 32.14 per cent ($766,250 to $520,000), and Mt Lawley’s median price fell by 28.28 per cent ($1.22 million to $875,000).

Mr Bourke said North Beach was just one example of the many top-end suburbs “hurt” during 2009.

“There was more activity in the bottom end of the market so the median moved down (in the top end),” he said.

“There was also a lot of land released across the road from the Ascot Racecourse, which would have pushed the median price down there.”

Peppermint Grove retained its crown as being Perth’s most expensive suburb, with a median house price of $4.2 million, while Medina, near Kwinana, was the least expensive suburb with a median of $230,000.

Most recent REIWA data showed more than 31,500 properties were sold last year.

About 80 per cent were houses and 20 per cent multi-residential, including apartments and units.

Properties in the Fremantle area took the longest to sell with an average of 86 days on the market, while Joondalup, Beldon, Craigie, Duncraig, Greenwood, Hillarys, Kallaroo, Kingsley, Marmion, Mullaloo, Padbury, Sorrento, Warwick and Woodvale, had the quickest turnover with an average of 44 days.

Housing stock also dropped last year from about 16,000 properties available in December 2008 to just over 11,000 last month.

Mr Bourke said the next financial quarter was traditionally WA’s busiest for real estate.

“We’re marginally under supplied . . . so buyers are really going to have to hunt hard and make decisions quickly to secure the home they want,” he said.

BEST PERFORMING SUBURBS
Suburb Median Sale Price
2008 -> 2009

1 GUILDFORD $565,000 -> $662,500
2 MOUNT RICHON $422,500 -> $493,750
3 VICTORIA PARK $575,000 -> $665,000
4 DARLINGTON $515,000 -> $590,000
5 ORELIA $297,500 -> $339,000
6 MAYLANDS $670,000 -> $754,000
7 SOUTH FREMANTLE $825,000 -> $925,000
8 STONEVILLE $457,500 -> $511,250
9 FREMANTLE $795,000 -> $880,000
10 JOONDANNA $633,000 -> $697,500

WORST PERFORMING SUBURBS
Suburb Median Sale Price
2008 2009

1 NORTH BEACH $1,222,500 $790,000
2 ASCOT $766,250 $520,000
3 MOUNT LAWLEY $1,220,000 $875,000
4 MOSMAN PARK $1,522,500 $1,150,000
5 FORRESTDALE $520,000 $395,000
6 APPLECROSS $2,075,000 $1,602,500
7 PERTH $875,000 $690,000
8 MARMION $885,000 $698,750
9 KALLAROO $660,000 $545,000
10 SWANBOURNE $1,600,000 $1,322,500

SUBURBS BY VOLUME SOLD
Suburb 2009
Sales

1 CANNING VALE 506
2 THORNLIE 340
3 ELLENBROOK 330
4 CLARKSON 277
5 GOSNELLS 275
6 BALLAJURA 256
7 BALDIVIS 238
8 PORT KENNEDY 235
9 BUTLER 224
10 TAPPING 218

THE median Perth house price has jumped 8.7 per cent, sending it back up over the $500,000 mark, a level last seen in March 2008.

According to the Australian Property Monitors’ Quarterly Housing report, the median house price in Perth is now $512,178.

Churchlands was the best performing Perth suburb for houses in 2009, with the median house price up 43.8 per cent on the year before.

Guildford came in second, with growth of 30.6 per cent, followed by Attadale with 25.4 per cent, Nedlands with 25 per cent and Darlington with 23.5 per cent.

The report revealed that as a nation 2009 saw the strongest annual house price growth since 2003.

Australia Property Monitors economist Matthew Bell said the growth was largely a recovery of price falls that occured in late 2007 and early 2008.

Median unit prices in Perth are up 15.8 per cent to an all time high, with growth second only to Darwin.

The best performing units were in East Fremantle, where the median price rose a whopping 37.2 per cent.

Shoalwater units had the second best growth of 13.3 per cent, while Bayswater (12.6 per cent), Como (12.5 per cent) and Mosman Park (10.8 per cent) rounded out the top five.

Real Estate Institute of WA president Alan Bourke said 2010 would see median house prices in Perth rise even further.

He said first homebuyers had taken a back seat, and ‘trade-up’ buyers, or those spending between $600,000 and $750,000, would drive the market in 2010.

“They are the most active type of market right now, and that moves the median price upwards,” Mr Bourke said.

“The first homebuyers grant has done what it needed to do.”

Despite the good news, Perth was the only capital city in Australia where property prices were not at an all-time-high.

Mr Bourke said WA’s strong growth during the boom years, while other states were falling, meant the bar was set high in WA.

“We had something in the order of three to five years of continual growth while most of the other states were dropping,” he said.

“The others states have a lot of catch up work to do … boy, they had some tough times.”