The LJ Hooker/BIS Shrapnel Residential Property Index Report released recently demonstrated that the Australian economic outlook had brightened considerably over the six months to December 2009.

"Economic growth has been buoyed by population growth, expansionary government policy, and a recovery in demand for core commodities and these factors have helped stabilise key economic indicators allowing measures of both consumer and producer sentiment to lift considerably," said Cheryl Holland of L.J. Hooker Burleigh Heads.

"Equity prices have recovered in the order of 45% from the March trough, and property prices are beginning to show signs of growth. Retail spending has also been solid and while still tight, credit conditions have eased for many businesses.

"China's economic growth appears to be accelerating, contributing to rising demand and prices for key commodities like iron ore and coal. This has provided enough upside for some major private engineering projects to go ahead, such as the $40 billion Gorgon gas project in Western Australia."

When it lifted the cash rate to 3.75 per cent in December last year, Australia became the first major developed country to announce an increase since the start of the global downturn, highlighting that the global downturn was far less pronounced here than in other countries, namely the US and parts of Europe.

The Federal Government's First Home Owner's Grant Boost Scheme (FHOGBS) was phased out over December quarter 2009 and reverted back to its original amount of $7,000 for the start of 2010.

"FHOGBS, as well as various other State Government incentives, underpinned strong growth in first home buyer demand particularly at the more affordable end of the market. Budget cutbacks now appear more likely than the announcement of additional stimulus and the probability of further rate rises this year has increased considerably.

"In the absence of continued first home buyer growth, demand from both up-graders and investors will be pivotal to sustained price growth over calendar 2010. Certainly the December quarter figures showed a rise in the number of up-graders entering the market across most capital cities, which should create continued demand going forward particularly in middle to high range properties," said Mrs Holland.

Trends in the Residential Price Index had property price growth rising over the three months to December 2009 in all capital cities except Hobart, where prices have softened since an October 2009 peak.

Sydney prices increased mildly by 1.9% in the quarter and on a year-on-year basis rose by 4.4% to December 2009, the best result since the middle of 2008.

Brisbane's index has risen significantly since its March trough, a total 24% - and rose a substantial 8.9% for the quarter. This led to a strong annual growth rate of 18.8% for the twelve months to December.

Similarly to Brisbane, Adelaide experienced significant growth in the house price index over recent months increasing by 11.5% for the December quarter. This highest quarterly growth since February 2008 highlights a recovering economy on Adelaide house prices.

Perth also recorded the highest quarterly growth rate in some time with the December quarter growth of 5% being the highest since January 2007. Up-graders appear to have been instrumental in this resurrection, accounting for 49.1% of total Perth house sales in the December quarter 2009.

For more information please contact:

Cheryl Holland
LJ Hooker Burleigh Heads
Phone: 0412 724 947

cholland.burleighheads@ljh.com.au

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