The residential property market is expected to pare back to more moderate levels of price growth this year after a stellar performance for most of 2009, a survey finds.
The RP Data-Rismark Hedonic Home Value Index forecasts capital growth rates for residential homes to fall back to single-digit levels in 2010 after rises in the low- to mid-teens last year.
Rismark International managing director Christopher Joye said he predicted the housing market would cool as mortgage rates rose back to more normal rates of seven to eight per cent.
“This implies that capital growth rates will fall back to single-digit levels consistent with expected change in the incomes of prospective buyers,” Mr Joye said.
The RP Data-Rismark Hedonic Home Value Index also found that home values fell by 0.3 per cent in December because of the seasonal summer slowdown, rising interest rates and phasing out of the enhanced first home buyers grant.
Despite the December quarter dip, national dwelling values rose 11.5 per cent over the course of the 2009 calendar year.
RP Data head of research Tim Lawless said the market drivers changed considerably over the year.
“The strongest gains were recorded early in the year with national home values up 3.1 per cent over the first quarter of `09,” Mr Lawless said.
“The market was being led by first home buyers and consequently the most affordable end of the market saw a 3.9 per cent lift in values.
“Over the second and third quarters it was upgraders in the middle and the top ends of the market that generated the strongest gains.”
Home unit values increased by 13.5 per cent compared with house values, which rose by up 10.4 per cent, the survey found.
The trend was the consistent across every capital city, with units returning a strong gain compared with freestanding homes.
The data also found that rental markets failed to keep pace with the rapid growth in home values, resulting in lower rental yields across every capital city.
Nationally, rental rates were down about 2.5 per cent.