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The last RP Data-Rismark Home Value Index for 2013 is out and the results indicate fair growth in property prices across Australia’s metro landscape. Home values ended 9.8% higher on the average in cities surveyed, marking the fastest growth rate in the sector since 2010. The increases are not a shocker for analysts, however, as it represented a marginal recoupment from value lost in previous years while interest rates were low. Sydney, Perth and Melbourne were the big drivers in the overall value increase while most other cities showed gains of less than 3.5%. Future performance predictions for 2014 are hard to discern from the data and most experts agree growth will vary. For more on this continue reading the following article from Property Wire.

Home values in Australian cities finished 2013 up 9.8% and increased 1.4% in the month of December, according to the latest RP Data-Rismark Home Value Index.

Over the fourth quarter of the year, capital city home values rose by 2.8% following on from a 2.8% increase in the first quarter, a 0.2% increase in the second quarter and a 3.7% increase in the third quarter.

This was the fastest annual rate of value growth since August 2010, and the largest calendar year increase in values since 2009 when home values were up by 13.7%.

Looking at the differences between houses and units, house value growth at 9.9% slightly outpaced the overall increase in unit values at 9%.

Breaking the year down into halves, the first six months of the year saw home values increase by 3% compared to a 6.6% increase over the second six months.
 
‘Clearly value growth has gathered momentum throughout the second half of the year but despite the strongest annual value growth since 2009, the rate of growth was not that startling given the low interest rate environment and the previous successive years in which home values fell,’ said Cameron Kusher.

‘Although home values increased by 9.8% in 2013 the growth follows a 3.8% annual fall in values in 2011 and a further 0.4% annual fall in 2012. Cumulatively, from peak to trough, capital city dwelling values were down 7.7% prior to this current growth cycle,’ he explained.

He pointed out that based on these latest results, it should be noted that between 1996 and 2013, there were seven instances where the calendar year rate of capital gain was greater than value growth over the past 12 months. He said that this indicates that although value growth has been strong compared to recent years, the current growth cycle has been somewhat muted.

The data reveals that each capital city housing market recorded positive home value growth in 2013, however, the cities driving the capital growth have been Sydney at 14.5%, Perth at 9.9% and Melbourne at 8.5%. Brisbane was the only other city to record value growth in excess of 5% at 5.1% with each of the remaining capital cities recording annual value growth of 3.5% or less.

An increase in dwelling values across each city over the past year has seen values move closer to their previous peaks where Sydney and Perth remain the only cities where home values are currently at record highs, up 10.9% and 3.6% over prior cycle peaks, respectively.

across the remaining capital cities values are all lower than their record highs with Melbourne down 0.7% on peak, Canberra down 0.8%, Adelaide down 2.4%, Brisbane down 6.6%, Darwin down 7.7% and Hobart down 12%.
 
Kusher said that it is clear that as the market enters 2014 and as values rise across each capital city, the rate of growth will vary greatly, adding that the main challenges in 2014 are likely to be the impact of a forecasted higher unemployment rate, affordability constraints for the more price sensitive sectors of the market, particularly in Sydney, Melbourne and Perth, and whether any regulatory changes will be implemented by APRA and the RBA to cool the near record high levels of investment activity. 

This article was republished with permission from Property Wire.