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Home prices surge as shares soar
On the up: Perth home prices are surging. Picture: Megan Powell/ The West Australian

Fresh optimism has hit the economy as Perth property prices surge and the sharemarket soars to a 22-month high.

The Real Estate Institute of WA said the $495,000 median house price was just $7500 shy of the all-time high after a 2.3 per cent rise last year, which was on par with WA's inflation rate.

Research groups Australian Property Monitors and RP Data, which use different data to calculate price changes, this week reported Perth house price rose 6.1 and 2.7 per cent respectively in 2012.

Residential land sales hit their highest level since the boom peak in 2006, according to the Urban Development Institute of Australia.

UDIA said the biggest developers in Perth recorded a 23.4 per cent rise in land sales over the December quarter and 77 per cent more sales over the year.

The good news adds to a bull run on the stockmarket with the S&P/ASX200 yesterday closing at a 22-month high of 4921. A 10-day rally on the index last month added $75 billion to the value of Australia's 200 biggest companies.

Consultancy Chant West said January returns for superannuants defied expectations with a 2.7 per cent average return across the 55 growth funds it tracked.

A spokesman expected 2013 would be strong but not quite as profitable as last year.

Chamber of Commerce and Industry chief economist John Nicolaou said the 70 per cent re- covery in iron ore prices was cause for optimism and he predicted "the return of the consumer" this year.

But he warned confidence would not fully return until business was satisfied there was no longer a threat from the euro crisis, declining Chinese growth and the US fiscal cliff.

AMP chief economist Shane Oliver was "cautiously optimistic" about the year ahead.

"The sharemarket often leads the economic cycle and this is what we are starting to see here," he said. However, he warned that mining investment was down substantially.

The West Australian

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