Australian property prices rise more slowly in November; bubble fears ease

Easing after two months of strong gains expected to lower concerns about bubble

PUBLISHED : Wednesday, 04 December, 2013, 5:33am
UPDATED : Wednesday, 04 December, 2013, 5:33am

An index of home prices for Australia's major cities rose only marginally last month, a slowdown after two months of strong gains that should temper concerns about a bubble, industry data shows.

Figures from property consultant RP Data-Rismark showed overall dwelling prices rose 0.1 per cent in November from October, when they climbed 1.3 per cent.

Annual growth in its home price index edged up to 8 per cent, a three-year high, from 7.9 per cent in October. Gains were led by Sydney, where prices were up 12.5 per cent on November last year, while Perth recorded growth of 8.9 per cent and Melbourne 6.6 per cent.

The median property value across all eight major cities hit A$525,000 (HK$3.7 million).

RP Data senior research analyst Cameron Kusher said that while further price growth was likely for this cycle, the peak may have passed for Sydney and Melbourne.

"The increase in home values seems to be slowing to a level reflective of more sustainability when compared to the growth in other indicators," he added.

While there has been much media speculation that record-low interest rates are feeding a bubble in home prices, policymakers have been unfazed.

The deputy governor of the Reserve Bank of Australia recently said there was nothing to fear in higher prices, in part because it was necessary to encourage more home building.

The central bank has been counting on a revival in construction to provide vital support to the economy as a long boom in mining investment starts to cool.