With more properties on the market, fewer buyers for these properties and the constant conveyer belt of mixed messages in the media, the traditionally strong spring selling season is likely to be subdued.
The latest RP Data Rismark Home Value Index confirms that Australia’s capital city property markets have slowed considerably, with predictions that prices will continue to show minimal change for the remainder of the year.
A very modest seasonally-adjusted rise of 0.4 per cent for median house prices was recorded in July, after a drop of one per cent in June – the first negative price movement for Australian capital city home values in 17 months.The median national city dwelling value dropped by 0.8 per cent for the July quarter to $465,000, however prices for the year rose by 9.7 per cent. Out of all capital city markets, Brisbane and Perth fared the worst with both experiencing a fall in house values of 2.5 per cent during the July quarter, Hobart prices fell by 2.4 per cent and Melbourne’s by 1.1 per cent, while Adelaide, Sydney and Darwin all saw small gains of 0.2 per cent, 0.3 per cent and 1.1 per cent respectively.
RP Data’s research director Tim Lawless says the latest data, which they had long anticipated, verifies that our property markets have experienced a soft landing after a fast paced recovery during 2009.
“In the period between end 2008 and March 2010, Australian home values rose by 16.3 per cent, yet monthly growth rates have declined consistently since the start of the year,” he said. “RP Data and Rismark expect to see the market track sideways over the second half of the year. There is the possibility of modest gains if mortgage rates remain in check and economic conditions continue to improve.”
After experiencing the strongest market rebound between the end of July 2008 and March 2010, the most expensive 20 per cent of suburbs have been hardest hit by the latest deceleration, with prices falling by two per cent over the three months to July. Meanwhile the cheapest 20 per cent and middle 60 per cent of suburbs recorded a house price decrease of 0.4 per cent and 0.7 per cent respectively.
Lawless notes, “As has been the case previously, the illiquid top-end of the market is showing higher volatility than lower priced markets. Home values in Australia’s most expensive suburbs fell more in 2008, rebounded quickly in 2009, and are now tapering at a more rapid rate than cheaper property markets.”
Managing director of Rismark International Christopher Joye said that RP Data’s indicator data is encouraging for the future of our property markets, and Lawless agrees that any significant falls in Australian home values appears very unlikely.
“The number of homes being advertised for sale across Australia is only five per cent higher than what we saw at the same time last year. We aren’t seeing a blowout in stock levels and properties are taking on average about 40 days to sell, which is only a little higher than recent experience,” he said.
Joye anticipates that a move by the major banks to push housing credit growth harder to improve profitability will provide further support for property values.
“Australian housing credit growth has been running at record low levels, and has experienced a downward trend since 2006. An increase in credit growth back to reasonable single-digit rates will provide further support to the market in the next 12 months,” he said.
The hotly contested sellers’ markets of the first half of this year are turning into more subdued buyers’ markets. Are you planning to take advantage of them.
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