Home prices extend their rally

Home prices extended their rally into 2010, adding to the difficulties faced by first-time buyers struggling to get into the market.

National home prices for houses and units increased 1.8 per cent in January, according to RP Data, taking them 11.8 per cent higher in 12 months. If the preliminary January figures are confirmed, the gain would mark the biggest monthly jump in the five-year series.

“What makes me angry is that my father was able to buy a three bedroom house in Williamstown and support a family (my mother didn't work) on the average income of a school teacher,” said Melbourne-based Justin O'Farrell. “I have no hope of doing the same.”
Home prices in Melbourne rose 4.3 per cent in the three months to January to a median price of $455,000 in January, while in Sydney they nudged up 1.7 per cent to $494,500, RP Data said.

Over the same period, Darwin home prices rose the most in January, jumping 4.6 per cent to $475,000, while in Perth they fell 0.6 per cent to a median price of $472,500, RP Data said.

Brisbane homes rose 1.8 per cent to a median price $440,00, while in Adelaide they jumped 3.2 per cent, to a median of $379,600, in the three months to January.

Canberra values rose 4.3 per cent to a median level of $489,250, while in Hobart values were down slightly by 0.1 per cent to $320,000.

Home loans rise

The rise in home prices is mirrored by rising mortgage lending, according to private lending figures released today by the Reserve Bank. Notably, business borrowing continued its slide.

The latest news of home price rise comes amid increasing signs housing affordability is out of the question for many first-home buyers.

''My wife and I are recently married and are looking to start a family,'' said Mr O'Farrell. ''We are currently renting but would like to buy a house as soon as possible. Unfortunately at the moment this is looking like it will not be possible.''

RP Data national research director Tim Lawless said January's result suggests the residential market has begun the year with a degree of confidence.

"Week-on-week, we are seeing an increase in the number of new property advertisements coming to the market," he said.

"Whilst new stock has been increasing rapidly, the total number of properties available for sale has been falling which is an indicator that buyers are for the time being outweighing sellers and new supply is being quickly consumed," Mr Lawless said.

Summary --
There is a bad news for those who wants to buy first hand house over in Australia. The premises are costly and there is a trend of continuous increasing. Their burden adds on when the bank loan rates have been increased as well. This spoils the dream of a new family to create their own warm and ideal home. However, there is a sign of increasing advertisements of new property and the units have been sold quickly as well. What is actually happening?

My critique --
From this news, we know that it is getting harder and harder to live a comfortable life during recession. People are now less affordable top own a house with the soaring house price and increase in housing loan rates. However, why there is a condition where the new property being consumed faster than it is supplied?? Is it the problem of wealth gap created this?