Extreme housing unaffordability not too distant

According to RP Data, median house prices shot up in Melbourne and Sydney over the quarter by 4.99 per cent and 1.9 per cent respectively.

Climbing house prices continue to impact home loan borrowers. While total owner occupier finance commitments increased by 1 per cent during August, they remain 22.8 per cent down over the year.

Finance commitments for new construction and the purchase of new dwellings were also down in August by 1 per cent and 2 per cent respectively, according to the Australian Bureau of Statistics (ABS).

Meanwhile, investors are increasingly seeking property priced below median values. For example, the Real Estate Institute of WA reported a drop in Perth's median house prices by 4 per cent over the quarter due to investors opting for lower value properties.

Affordability issues continue to blight the first home buyer sector, as housing finance commitments fell by 2.5 per cent in the month of August - a fall of 49.3 per cent for the year, putting first home buyer commitments at their lowest since January 2005, according to RP Data research.

Moreover, land sales eased in most Australian capital cities over the June 2010 quarter, according to the latest residential land report from the Housing Industry Association (HIA).

And despite the RBA surprising the industry by leaving the cash rate unchanged earlier this month, there is a concern that the RBA will need to exercise extreme caution when considering future rate hikes.

Residex chief executive officer John Edwards says while unaffordability is not at its worst position, it is "getting there".

Mr Edwards says it will not take too many interest rate increases to reach the point where the Reserve Bank would need to seriously evaluate the impact on housing affordability in Australia.

RESIDENTIAL PROPERTY - LATEST FIGURES

DARWIN:

Median house price: $530,000

Quarterly growth: -0.93%

Annual growth: 17.05%

Average annual growth: 11.56%

Median weekly rent: $520

Gross rental yield: 5.10%

Median unit price: $399,138

Quarterly growth: -0.22%

Annual growth: 16.92%

Average annual growth: 9.61%

Median weekly rent: $410

Gross rental yield: 5.34%

PERTH:

Median house price: $492,000

Quarterly growth: -2.57%

Annual growth: 11.24%

Average annual growth: 12.68%

Median weekly rent: $380

Gross rental yield: 4.02%

Median unit price: $415,000

Quarterly growth: -2.12%

Annual growth: 12.33%

Average annual growth: 13.02% Median weekly rent: $330

Gross rental yield: 4.13%

ADELAIDE:

Median house price: $405,000

Quarterly growth: 1.25%

Annual growth: 10.64%

Average annual growth: 11.28%

Median weekly rent: $315

Gross rental yield: 4.04%

Median unit price: $340,000

Quarterly growth: 3.03%

Annual growth: 89.14%

Average annual growth: 11.96%

Median weekly rent: $275

Gross rental yield: 4.21%

MELBOURNE:

Median house price: $505,000

Quarterly growth: 4.99%

Annual growth: 19.90%

Average annual growth: 10.11%

Median weekly rent: $350

Gross rental yield: 3.60%

Median unit price $432,500

Quarterly growth: 2.49%

Annual growth: 16.34%

Average annual growth: 8.88%

Median weekly rent: $340

Gross rental yield: 4.09%

BRISBANE:

Median house price: $465,000

Quarterly growth: -2.62%

Annual growth: 10.12%

Average annual growth: 11.35%

Median weekly rent: $370

Gross rental yield: 4.14%

Median unit price: $380,000

Quarterly growth: 1.27%

Annual growth: 5.63%

Average annual growth: 8.31%

Median weekly rent: $355

Gross rental yield: 4.86%

SYDNEY:

Median house price: $591,000

Quarterly growth: 1.90%

Annual growth: 19.98%

Average annual growth: 8.56%

Median weekly rent: $450

Gross rental yield: 3.96%

Median unit price: $451,000

Quarterly growth: 2.50%

Annual growth: 11.69%

Average annual growth: 5.57%

Median weekly rent: $410

Gross rental yield: 4.73%

CANBERRA:

Median house price: $540,000

Quarterly growth: -3.57%

Annual growth: 15.22%

Average annual growth: 11.94%

Median weekly rent: $470

Gross rental yield: 4.53%

Median unit price: $415,000

Quarterly growth: -1.19%

Annual growth: 9.70%

Average annual growth: 11.49%

Median weekly rent: $400

Gross rental yield: 5.01%

Source: RP Data

BUILDING APPROVALS

TOTAL DWELLING UNITS APPROVED
August 10: 13,049
Change from July 10: Decreased by 4.7%
Change from Aug 09: Increased by 4.4%

TOTAL PRIVATE SECTOR HOUSES APPROVED
August 10: 8,208
Change from July 10: Decreased by 4.3%
Change from Aug 09: Decreased by 10.3%

TOTAL PRIVATE SECTOR OTHER DWELLINGS APPROVED
August 10: 4,313
Change from July 10: Increased by 1.4%
Change from Aug 09: Increased by 66.8%

Source: ABS