Sydney House Prices "On the Way Up"

According to the Sydney Morning Herald, Sydney house prices rose over the April quarter and as auction clearance rates have recently consolidated, homeowners can expect house prices to rise over the May quarter.
The latest Australian Property Monitors research has revealed that Sydney house prices rose 1.1 per cent over the April quarter. This followed a fall in house prices of 0.6 per cent over the March quarter.
The biggest contributor to the April rise in house prices came from the top 25 per cent of the market, which increased by 5 per cent. The upper-middle price sectors rose by 1.7 per cent while the bottom 50 per cent of the market recorded no rise in median house prices over the April quarter.
The report continues:
Sydney median house price growth will continue to be driven by the influence of the underlying housing market fundamentals.
Rising incomes as a consequence of low unemployment and emerging shortages of skilled labour will provide buyers with increased incentive, capacity and confidence in the housing market. The Bureau of Statistics reports that Sydney's April unemployment rate was 5 per cent compared to 5.7 per cent a year ago; 42,280 jobs have been created over the past year in Sydney and NSW annual private sector incomes have increased by 4 per cent.
Increased demand for labour will be driven by the unprecedented resources boom driving through an estimated $380 billion investment in mining over the next five years.
The benefits of this strong economic growth will ripple throughout Australia, especially Sydney, as it re-energises as the commercial centre of Australia.
Growing population and increased immigration to meet skill shortages will continue to fuel demand for housing in a city already constrained by a tight rental market and chronically low levels of new home building.
According to the Real Estate Institute of NSW, the rental vacancy rate for suburbs within a 10-kilometre radius of the CBD fell 0.2 per cent to only 0.9 per cent in April. Sydney just has too many people and not enough houses, with no relief in sight.
Official interest rates are expected to remain on hold in the short-term as key measures of economic growth and inflation continue to remain within the Reserve Bank's neutral policy band. Mortgage interest rates and lending costs for new borrowers are currently under downward pressure as competition between banks intensifies as a consequence of dwindling credit growth.
With incomes rising, a shortage of housing and the pressure off interest rate rises in the short term, the fundamentals are signalling increased home buying activity in Sydney through 2011.

A Slow RBA Dawn

An article by Robert Gottliebsen in the Business Spectator starts with "Thank Goodness sanity prevailed in the Reserve Bank boardroom." He refers, of course, to the decision not to raise interest rates this month. The Reserve Bank is hopefully well aware of the devastating effect the November interest rate rise, and the associated media storm, had on the property world. That effect is continuing, and any further increase in interest rates could tip the market over the edge into a full housing price collapse.
The Reserve Bank statement talks up the mining boom, but Mr Gottliebsen argues they have not grasped the seriousness of the situation in non-mining Australia. Their statement does include "Growth in credit to households has softened, as have housing prices."
His article includes the sentence, "Tony Abbott and Julia Gillard are clashing horns over the carbon tax and both are missing the main issue."