House price rises run out of steam as mortgage rates rise bites

House prices are topping out in most Capital cities as the constant talk of more hikes in mortgage rates, both from the Reserve bank of Australia and major banks saying that their margins are being eroded in the funds market, and they will be moving to preserve then.

Australia’s median home price rose 3% in just the first months of this year,with a 5% increase in median house prices in the December 2009 quarter.

This leaves Sydney’s median house price at over $600,000, making it one of the most expense cities to buy a home in the World, after an annual price increase of 14%.

Melbourne is not far behind and median house prices there have boomed with a 27% percent to $549,980. Some Melbourne suburbs in fact have  performed incredibly with average house values defying gravity with rises of 38%. House prices have slowed down now, but not home constructions, which are going well still with housing lot development easier to get approved than Sydney and Brisbane. Melbourne also have much more land available to build residential homes and looks set to grow bigger than Sydney over the next few decades.

Brisbane looks really cheap in comparison with the median house prices rising 9% to just over $450,000.

I suspect that Brisbane and the Gold Coast house prices will play catch up over the next two years, with all home prices rising but a much slower rate, due to predicted mortgage interest rates increases of around one percent.