Home values showing signs of recovery

Despite my recently discussing the downside to consumers becoming too confident when it comes to real estate, there is information out there that indicates we are right to be feeling less anxious than we have in the past. Recent information from the RP Data/Rismark Australian Home Value Index indicates that home values are continuing to recover, and have recorded a 2.8% increase over the first four months of this year.

 

This increase essentially wipes out the price falls seen in 2008 according to RP Data’s National Research Director Tim Lawless. This new information reveals that over the first four months to April this year, every mainland capital city apart from Perth has recorded an increase in home values. The most significant gains were seen in Darwin (+5.3 per cent), Melbourne (+4.4 per cent), and Sydney (+3.9 per cent). Home values in Australia’s mortgage belts, which are the prime first home buyer markets, were flat or falling between 2004 and 2007 while the inner city and affluent markets enjoyed consistent growth. In 2008-09 we have seen a reversal of this situation.

 

As a result, there is no denying that during these uncertain economic times, the first-time buyer activity has supported the market, but many people forget that 70-75% of home buyers are not first timers and this current return to capital growth comes as weekly rental rates start to level, making the market attractive to more than just first time buyers.

 Rental rates across Australia have surged over the last three years, providing the best gross rental yields investors have seen for a long time. But now we are seeing growth rates for weekly rents start to level due to decreasing rental affordability, and this is causing many renters to consider buying a home instead of renting. This is good news for those first home buyers still waiting to take a step into the market. It’s also great news for investors - gross rental yields are likely to peak over the coming months suggesting that now is probably the best time for this group to roll up their sleeves and become active.  
Posted by Charles Tarbey on 03/06/2009 at 9:23 AM | Categories:

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