Property prices on rise again

Shane Wright Economics Editor
In the money: WA property prices are rising again. Picture: Steve Ferrier/The West Australian

West Australians have $600 billion tied up in their houses and units and signs are emerging the prices of both are rising again.

The Australian Bureau of Statistics reported yesterday that Perth house prices climbed 0.3 per cent through the final three months of last year.

That followed a 0.1 per cent increase in the September quarter and a flat June quarter.

Over the full year, house values lifted by a weak 1.2 per cent in Perth - effectively half the annual inflation rate.

Nationally, values lifted 0.2 per cent in the December quarter for a 1.7 per cent annual lift.

Sydney continues to outstrip house prices everywhere, with prices jumping 3.4 per cent through the final three months of last year and 12.2 per cent for the year.

The December quarter increase came before the Reserve Bank cut interest rates by a quarter of a percentage point last week.

The importance of bricks and mortar to Australians was clear in separate ABS figures.

It found there are now one million houses in WA worth a combined $600 billion. Last year the State's housing stock grew by 23,000.

Nationally, the nation's 9.4 million houses and units are worth $5.4 trillion, more than three times the value of Australia's annual economic output.

Through last year the value of our homes grew by $407 billion.

In cutting rates, the Reserve signalled it was concerned that the move could lead to a lift in house prices and poor lending practices.

HSBC chief economist Paul Bloxham warned yesterday that though housing was important to balance the slowdown in mining, there was a danger in such low interest rates.

"It is also possible to have too much of a good thing," he said.

"Construction of new housing is welcome but further housing price gains may present challenges. Recent cuts in mortgage rates to new all-time lows increase the risk of the housing market over-inflating."

NAB's monthly business survey for last month, released yesterday, showed a further fall in trading conditions and confidence.

NAB chief economist Alan Oster said he expected rates to be cut again by May.