New figures from RP Data and Rismark International show that capital city dwelling values rose 1.6 per cent in July, taking the cumulative recovery in residential home values to 6.5 per cent since the market bottomed out in May 2012.
The July results took the change in capital city home values to +2.3 per cent over the three months ending July 2013, and +4.9 per cent over the past twelve months.
According to RP Data research director, Tim Lawless, despite the strong headline result, the market remains somewhat of a mixed bag.
"The housing market is being buoyed by very positive conditions in Sydney, Perth and to a lesser extent Melbourne, with residential values in these cities now 3.7 per cent, 4.4 per cent and 2.4 per cent respectively higher over the past three months alone. At the other end of the scale you have cities like Adelaide, Brisbane and more recently Darwin where conditions are more sedate with dwelling values slipping lower over the past quarter," Mr Lawless said.
"By including rental yields in our assessment of the housing market, some clarity is provided as to why investors are becoming so active.
"The RP Data-Rismark Accumulation Index, which factors in both capital gains and gross rental yields, is up 9.4 per cent over the past year. As noted by RBA Governor Glenn Stevens earlier this week, with an easing in monetary policy one of the expected and intended effects will be that people start to shift their portfolios away from the less risky assets such as cash and in the direction of holding equities and physical assets such as property."
The Accumulation Index showed that the most significant total gross returns were recorded in Perth (+13.3 per cent) and Sydney (+11.2 per cent) over the 12 months ending July 2013.
Rismark CEO, Ben Skilbeck, said that lending commitments data had also highlighted an increase in investor activity.
"While overall outstanding credit to housing only grew 4.4 per cent over the year to May 2013, the dollar value of lending commitments to investors in the month were 24 per cent higher than in May 2012. For owner-occupiers, the May 2013 lending commitments year-on-year increase was 11 per cent," he explained.
RP Data noted that vendor metrics had also continued to strengthen over July, with a typical capital city dwelling selling in 45 days, compared with 59 days a year prior.
"With the housing market once again showing solid capital gains and rents also rising, the issue of housing affordability is likely to begin attracting more attention," said Mr Lawless.
"The recent housing market correction which bottomed in May 2012, where values were down 7.4 per cent from peak to trough across the combined capital cities, together with mortgage rates moving to historically low levels, delivered substantial affordability improvements for Australian housing.
"However, with Sydney, Perth and Canberra values now back at record high levels and some other capital cities not far off their previous peaks, there are likely to be a growing number of households who find it challenging to enter the housing market."
Mr Skilbeck added, "While the highly anticipated interest rate cuts in August will further act to improve housing affordability, if these cuts do eventuate they will likely spur further house price appreciation making the deposit requirements for first home buyers more challenging."
The RP Data-Rismark results also showed that the more expensive upper quartile of the market had continued to underperform the other broader priced segments of the housing market.
According to Mr Skilbeck, the mid-market achieved 1.4 times the growth of the upper quartile over the 12 months ending July 2013.
"While the mid-market has largely recovered its peak to trough declines, the upper market still needs to add about four per cent before it can claim the same," concluded Mr Skilbeck.
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