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The average house price in Sydney has broken the $600,000 mark in September 2009 for the first time.

This increase augurs well for existing home owners who have bought into the property market in earlier years and this new equity will allow them to upgrade into more expensive dwellings.

However, this news is not good for those who are trying to get into the property market for the first time when interest rates are on the way up as the First Home Owner’s Grant is being wound back.

Factors which are driving prices up include an acute shortage of new dwellings being built. Nationally, new dwellings have decreased from 173,000 in 2002 to 124,000 in 2009. At the same time, net migration into Sydney has increased. Another factor contributing to price increases is strong investment demand from Chinese investors. Reports have shown real estate agents in both Sydney and Melbourne taking on Mandarin speaking agents to cater for a surge of buyers from China. Record low interest rates and the FHOG over the last year have also supported the property market to a large extent.

The unfortunate truth to this price rise phenomena is that established home owners will continue to become better-off while those who are trying to get into the property market will be forced to move further away from suburbs which are close to Australia’s capital cities.

Granted there are those who prefer to stay away from the urban areas and enjoy a more relaxed and laid back lifestyle. However, the reality of a much higher concentration of job opportunities means that many who work in our capital cities have no choice but to either pay higher rents, juggle a huge mortgage with the family budget or forced to commute longer distances often with longer traveling time and having gradually less time for family and friends.

Popularity: 19% [?]

Auction clearance rates in Melbourne and Sydney last weekend were 80% and 62% respectively despite the Spring racing carnival and Caulfield Cup in Melbourne.

The Housing Industry Association’s affordability index dropped 3.3% (from 153 to 147.9 index points) in the September 2009 quarter from a mere 0.4% drop in the June 2009 quarter. According to a senior HIA economist, the outlook for housing affordability is not good as interest rates are expected to increase over the next 6 months, whilst the first-home owner’s grant will be faced out completely by 31 December 2009. In addition, the process to increase housing supply is still facing a lot of barriers.

Over the last year and a half, the RBA has reduced interest rates by 425 basis points to a 49-year low prior to the recent 25 basis point increase. Coupled with the Federal government’s boost to the First Home Owner’s Grant and significant growth in immigration, the property market has been very strongly supported by these factors.

Victoria recorded the biggest drop of 9.3%, followed by 5.5% in New South Wales, 5.1% in Tasmania and 3.9% in Western Australia. On the other hand, ACT and South Australia’s affordability improved by 3.8% and 2.2% respectively.

Popularity: 14% [?]

The recent interest rate rise of 0.25% to 3.25% will have little impact on the Australian economy considering the level has been reducing over the last year to historical lows and that consumers have been factoring a rise in recent months. The economy has been performing well and will continue to be resilient as long as subsequent anticipated interest rate rises are gradual. The RBA will continue to ensure the balance between growth and overheating against a stagnating economy is well managed.

Popularity: 8% [?]

Despite the FHOG being gradually reduced recently, auction clearance rates were still holding up with first home buyers trying to secure the benefit during the last week of the grant. Clearance rates for Sydney Melbourne and Brisbane last week were 67%, 86% and 67% respectively.

Analysts feel that house prices will not be significantly affected as a result of the gradual withdrawal of the grant. The winding back of first home buyers will see investors returning into the market. There may be some minor softening in prices but it will not be significant.

By far the greatest impact of the FHOG in New South Wales have been in the western suburbs of Sydney. Please refer to the list of the First Home Owner benefits – Top 20 postcodes.

Popularity: 9% [?]

According to the Australian Bureau of Statistics, Australia’s population grew by 2.1% to 21.8 million people in the 12 months to 31 March 2009. This growth rate is considered to be unprecedented since the last population boom in Australia in the 1960s.

The Rudd government has forecast recently that Australia’s population is expected to grow to approximately 35 million people, which is about 7 million higher than previously predicted due to fertility rates and current migration policy.

This growth will have significant implications on Australia’s property market. Currently, approximately 72% of Australians live around the major capital cities of Sydney, Melbourne, Brisbane, Adelaide, Perth, Darwin, Canberra and Hobart. Sydney and Melbourne alone account for approximately 37% of Australia’s total population. The concentration of the majority of population in these 8 capital cities is due to regional Australia being relatively undeveloped. This uneven population concentration around the major cities is further compounded by the slow down in housing approvals and completions due to a number of factors.

As a result of scarcity of land in and around these major cities in Australia, there will be an increasing upward pressure on housing and property prices as the population grows into the future. The consequent of this is the increasing gap of people in Australia who can afford to live in and around the CBD of the capital cities and those who are forced further away from these areas. It will ultimately depend on the government’s initiatives and policy on how best to accommodate this ballooning growth, that is whether to develop better transport, communication and utility infrastructure both in major cities and regional Australia. On balance, property experts are still advocating investors to consider strategic locations in and around the major cities and in major growth areas approximately 25 – 40km radius of their centres. Due to continued high demand, these areas will continue to convince those already entrenched to stay and entice those who have the means to get in.

Popularity: 7% [?]

 

The Real Estate Institute of NSW released the following figures for June quarter on Tuesday 29 September 2009 as follows:

 

Median House Price

 

Sydney $544,000 (3.02% increase over the quarter)

Wollongong $368,000 (0.42% decrease over the quarter)

Median Apartment Price

 

Sydney $382,000 (2.63% increase over the quarter)

Newcastle $295,000 (4.53% decrease over the quarter)

Wollongong $299,000 (3.46% increase over the quarter)

Popularity: 33% [?]

The tables below show Sydney median house and apartment prices under the following major Sydney metropolitan areas:

1. East and Inner City

2. Lower North Shore

3. Upper North Shore

4. Northern Beaches

5. Inner West

6. West

7. South West

8. South

9. Canterbury Bankstown

Important notes:

1. Median house and apartment prices are for the years to June 2008 and June 2009.

2. Median house and apartment price is the middle set of prices – half the prices are higher and half are lower

3. SNR stands for statistically not reliable, meaning there  were fewer than 10 sales and therefore insufficient data for a median price.

4. N/A means not applicable.

5.  Source of the data is from Australian Property Monitors.

6. Median house and apartment prices quoted are in thousands of Australian dollars.

7. Excel spreadsheet of median house and apartment prices of all Sydney suburbs (Total 667 suburbs)

A. Houses – Overall Top 5 Suburbs in Sydney

1. Darling Point     $3,350

2. Tamarama          $3,255

3. Vauclause          $3,028

4. Bellevue Hill       $2,450

5. Dover Heights    $2,445

B. Houses – Top 5 Suburbs in East and Inner City

Incidentally, all top 5 suburbs in Sydney above are from the East and Inner City areas.

C. Houses – Top 5 Suburbs in Lower North Shore

1. Longueville     $2,090

2. Mosman          $1,900

3. Northwood     $1,715

4. Northbridge    $1,670

5. Castlecrag       $1,650

D. Houses – Top 5 Suburbs in Upper North Shore

1. Kenthurst       $1,200

2. Pymble            $1,160

3. Warrawee        $1,130

4. Annangrove     $1,075

5. St Ives                 $925

E. Houses – Top 5 Suburbs in Northern Beaches

1. Clontarf                          $2,150

2. Palm Beach                   $1,863

3. Balgowlah Heights    $1,475

4. Manly                             $1,388

5. Bayview                        $1,300

F. Houses – Top 5 Suburbs in Inner West

1. Balmain East               $1,310

2. Breakfast Point          $1,238

3. Birchgrove                   $1,150

4. Rodd Point                   $1,105

5. Cabarita                        $1,075

G. Houses – Top 5 Suburbs in West

1. Oakville                        $878

2. Windsor Downs        $863

3. Newington                 $623

4. Beaumont Hills        $588

5. Kellyville                   $570

H. Houses – Top 5 Suburbs in South West

1. Grasmere                  $675

2. Voyager Point        $608

3. Camden Park           $550

4. Macquarie Links   $535

5. Abbotsbury           $518

I. Houses – Top 5 Suburbs in South

1. Burraneer             $1,440

2. Lilli Pilli                $1,300

3. Sandringham      $1,191

4. Kyle Bay               $1,100

5. Cronulla               $960

J. Houses – Top 5 Suburbs in Canterbury Bankstown

1. Ashbury                $691

2. Hurlstone Park  $638

3. Campsie                $524

4. Belfield                  $517

5. Picnic Point         $511

A. Apartments – Overall Top 5 Suburbs in Sydney

1. Dowes Point         $1,550

2. Darling Point      $1,050

3. Millers Point       $990

4. Point Piper          $950

5. Seaforth               $795

B. Apartments – Top 5 Suburbs in East and Inner City

1. Dowes Point       $1,550

2. Darling Point     $1,050

3. Millers Point       $990

4. Point Piper          $950

5. Little Bay             $723

C. Apartments – Top 5 Suburbs in Lower North Shore

1. Cremorne Point        $770

2. Killara                           $685

3. McMahons Point      $670

4. Gordon                        $660

5. Kirribilii                      $650

D. Apartments – Top 5 Suburbs in Upper North Shore

1. North Turramurra     $733

2. St Ives                            $580

3. Pymble                          $550

4. West Pennant Hills   $538

5. Bella Vista                   $496

E. Apartments – Top 5 Suburbs in Northern Beaches

1. Seaforth           $795

2. Curl Curl         $693

3. Warriewood  $682

4. Manly              $580

5. Fairlight         $560

F. Apartments – Top 5 Suburbs in Inner West

1. Cabarita                $750

2. Breakfast Point  $644

3. Abbotsford         $578

4. Birchgrove          $570

5. Mortlake              $555

G. Apartments – Top 5 Suburbs in West

1. Glenwood             $480

2. Homebush Bay   $470

3. Kellyville             $440

4. Newington           $420

5. Rouse Hill           $394

H. Apartments – Top 5 Suburbs in South West

1. Holsworthy            $399

2. Spring Farm           $338

3. Canley Heights      $336

4. Fairfield Heights  $330

5. Casula                       $320

I. Apartments – Top 5 Suburbs in South

1. Hurstville Grove    $670

2. Caringbah South  $620

3. Peakhurst                $523

4. Sylvannia                $465

5. Wolli Creek             $418

J. Apartments – Top 5 Suburbs in Canterbury Bankstown

1. Picnic Point      $480

2. Padstow            $466

3. Panania             $460

4. Belfield             $432

5. Condell Park   $370

Popularity: 54% [?]