Perth leads capital city house prices up 1.6% in December 2012 quarter: ABS

The Perth house price index rose 2.9% in the final quarter of 2012 to lead a 1.6% gain across the combined seven capital city housing markets, according to preliminary ABS figures.

Sydney (2.3%), Darwin (2.6%) and Canberra (2.1%) also performed strongly with more modest gains in Melbourne (+0.7%), Brisbane (+0.7%) and Adelaide (+0.8%).

Hobart was the only capital city house index to record a fall (-1.4%) over the quarter.

Australian Financial Review columnist and economist Christopher Joye tweeted that the quarterly rise of 1.6% "smashed" expectations of a 0.3% gain, while bearish economist Steve Keen noted that house prices rose as his mortgage accelerator predicted and "still no better than CPI inflation rate".

AMP Capital Investors chief economist Shane Oliver said the ABS data confirms other house price data in indicating a gradual housing recovery underway.

RP Data-Rismark has house prices up 1.2% over January.

The stronger preliminary December quarter results follows a weak September 2012, with a preliminary estimate of a 0.3% September quarter gain revised down to a 0.1% fall.

Over 2012, house prices are up 2.1% based on preliminary ABS estimates.

Annually, house prices rose in Darwin (+10.1%), Perth (+5.6%), Sydney (+4.2%), Brisbane (+0.7%) and Canberra (+0.3%) and fell in Hobart (-6.1%), Adelaide (-0.4%) and Melbourne (-0.2%).

According to the ABS, the rise in the Perth house price index was consistent across a range of clusters while in the case of Sydney, houses priced below $750,000 contributed most to the rise in the December 2012 quarter.

The revised negative movement in the September quarter 2012 was the result of falls in Sydney (-0.5%, revised from +0.3%), Adelaide (-0.8%, revised from -0.6%), Melbourne (-0.1%, revised from +0.2%), Canberra (-0.6%, revised from -1.1%) and Hobart (-0.7%, revised from +0.2%). This was partially offset by rises in Perth (+1.1%, revised from +1.8%), Brisbane (+0.4%, unchanged) and Darwin (+0.3%, revised from -0.5%).

The ABS uses a stratification approach to control for compositional change in the sample of houses used to compile the House Price Indexes each quarter.

This approach stratifies (clusters) houses according to two characteristics: the long-term level of prices for the suburb in which the house is located, and the neighbourhood characteristics of the suburb, as represented by the ABS Socio-Economic Indexes for Areas (SEIFA).