Any doubt Australia was not experiencing an ever accelerating housing bubble was squashed yesterday, when RP Data – Rismark released house price data for February.
In Darwin, Residential Property (Units & Houses) increased 19.7% for the year to February 2010. This was closely followed by Melbourne (19.3%), Canberra (14.7%), Sydney (12.3%), Adelaide (9.1%), Perth (7.5%) and Brisbane (6.5%). This comes after wages rose by just 2.9% last year, their slowest growth rate in nearly a decade.
Prices surged in Sydney and Melbourne in the month of February, returning a monthly gain of 2.6% and 2.0% respectively.
These figures put further pressure on the Reserve Bank to put up interest rates next week. In an interview with the RBA Governor, Glenn Stevens earlier this week, he said said that it would be unwise to keep interest rates too low for too long, even going as far to warn investors of the housing bubble – “I think it is a mistake to assume that a, you know, riskless, easy, guaranteed way to prosperity is just to be leveraged up into property”
As households spend more money from the household budget on housing expenses, retail sales have recorded a “surprise” fall in February. Seasonally adjusted figures released on Wednesday show retail sales fell 1.4%. Economists had expected a 0.3% rise. Falls in retail turnover is likely to put pressure on retail jobs in the coming months, as retailers cut staff in a bid to remain afloat.
» Home prices surge – again – The Sydney Morning Herald, 31st March 2010.
» RP Data – Rismark Hedonic Home Value Index Results – RD Data, 31st March 2010
» Australian Retail Sales Disappoint – The Wall Street Journal, March 30th 2010.