The price hikes of houses in Australia are starting to reflect the rise of interest rates by the banks. The swell in house prices has caused many people to suffer increasingly soaring costs which is leading to mortgage stress. It has been found that the prices of houses in Melbourne have risen up to 8.1% in a year which is approximately double compared to the pervious year. The leading city for price hikes was Huntingdale where the increases of 53% were found. Sandhurst is not far behind with a 50% increase and Carlton sustaining 47% hike. he price hike not only affected the metropolitan cities but also in suburban and rural Victoria which rose to an average of 4.5%. However, some areas such as Rockbank, Melton, Millgrove and Diggers had a very low growth rate.
The home prices hike has been a great disaster for the Australian general public. It is said that the year 2007 was a boon to both the buyers and sellers of houses because the rate of residents were medium and affordable and also the interest rate of cash was low. But the markets have now totally changed. There is a general view that prices have gone down in many suburban areas and the auction sale rate has dropped to 65%. Because of this, the auction of sale has also come down to 360 properties compared with 614 the previous year.
In Victoria, the medium-size house price has risen to 164% in ten years from $88,000 to $232,000 in 2007. Lake Tyers Beach had the largest rise (59%), followed by Strathmerton (37%) and Ouyen (31%). The growth levels show that the percentage has come down to 7.3 from 18.9% in 2002 which was the highest. Survey results show that the price of units have increased to 10.3% and the vacant blocks increased up to 2.5%.
One prominent valuer says that the total sales value of property across the state was around $74 billion, an increase of 22% from 2006 onwards. The sales rose to 14.8% from 152,890 in 2006 to 175,455 in 2007. The property rates will gain from the Government's provincial first home bonus, which is given in addition to the first homeowners grant. The first home bonus of up to $15,000 is given to the first-home buyers in regional areas towards their new home.
The first five Melbourne suburban areas with the maximum medium house prices in 2007 were: Toorak ($2,530,000), Brighton ($1,600,000), Canterbury ($1,500,000), East Melbourne ($1,432,500) and Malvern ($1,411,000). And the first five lesser ones were: Melton South ($180,000), Rockbank ($189,000), Millgrove ($190,000), Melton ($192,500) and Diggers Rest ($200,000).
Thus the hike in house prices in Australia has not only affected the buyers but also the sellers because of the low sales compared to the previous years. Even the auction sales have also gone down because of this. Economist and valuers are of the view that the rise of house prices is due to the rise in interest rates and inflation rate. The Government and the Reserve Bank of Australia (RBA) should take steps to control the inflation growth and the RBA has to reduce the interest rates.