House prices jump 1.4% in February, up 12.7% over last 12 months

House prices across the country grew by 1.4% during February, according to the latest figures from the RP Data – Rismark Hedonic Home Value Index, with the data also revealing values rose by 12.7% over the previous 12 months.

The figures show the national median dwelling price in capital cities is now at $455,000, with Melbourne the best performing capital city with a rise of 5.4% over the quarter to a median price of $480,000.

Sydney prices grew by 3.8% to a median of $519,000 over the three months to February, while Adelaide prices have continued their increase with a 2.5% jump to $385,000. Brisbane values rose by 0.4% to $437,000 as Darwin prices grew 4.2% to $480,000.

While Canberra 2.7% to $540,000, not all capital cities have recorded increases. Perth recorded a 0.2% decrease to $475,000, while Hobart recorded a drop of 4.2% to $325,000 – the weakest performing city over the quarter.

The highest rental yields were recorded in Darwin with a result of 5.5% for houses and 5.7% for units, while Melbourne and Perth recorded yields of 3.9% for houses in the weakest results, with Perth also recording a gross rental yield of 4.3% for units.

But RP Data said in a statement the recent growth in capital city home values must be placed in context, and that according to the latest ABS National accounts data, disposable household incomes grew by 6% per capita, per annum over the five years to December 2009.

At the same time, Australian capital city dwelling values increased by “almost exactly the same amount” at 6.2% per annum.

Rismark chief executive Christopher Joye said that in some areas, housing prices have actually been outstripped by rises in disposable incomes.

“In the six years to end of December 2009, dwelling values in Australia’s largest city, Sydney, only rose by a stunningly low 1.3% per annum. At the same time, per capita disposable household incomes grew by 5.7% per annum.”

“While we will see year-by-year fluctuations, it is reasonable to expect house prices to track disposable incomes, all things being equal.

He also said the growth has been strengthened by solid population growth of 2.1% per annum, “which is among the strongest in the developed world”.

“While the government believes the population will be 35 million persons by 2050 we 2050, think it is more likely to be closer to 40 million persons, even assuming lower net overseas migration.”

RP Data research director Tim Lawless also said in a statement the continued rate of capital gains over the current year so far comes as a surprise, having previously thought increased interest rates and the winding up of the first home owner’s grant would dampen demand.

“Consumer confidence economy, remains well above the long-term average thanks to better than expected domestic economic conditions, particularly an unemployment rate that has peaked much earlier and lower than anyone predicted. Such high levels of confidence appear to have reduced the dampening effect of rising rates and the removal of fiscal stimulus,” he said.