admin-ajax.php

House prices slip again

The latest figures from RP Data show that the median house price around Australia fell by a seasonally adjusted 0.4% in August.

Despite all the predictions of a property collapse, over the past year capital city dwelling values fell by 3.2%.

Over the last month house prices in Canberra fell 1.8% in August and by 1.7% in the quarter.

Hobart values fell 0.8%, Adelaide fell by 0.4%, Brisbane and Melbourne by 0.2% and Sydney remained flat over the

Month to month figures are not as useful as the annual changes which were as follows:

The best performing city was Sydney, where the annual change in dwelling value was basically unchanged – with a growth of +0.3%

The reported home values fell in all other states. Over the year prices in Perth fell 7.1%, Brisbane – 6.1%, Hobart – 5.3%, Adelaide – 4.9%, Melbourne – 4.3%,Darwin  -3.4% and Canberra -2.1%, Nationally prices were down 3.2%.

Despite the declines RP Data senior research analyst Cameron Kusher says prices remain resilient ahead of the spring selling season.

“Over the past 12 months Sydney dwelling values have increased by 0.3% including rents, Sydney’s total return has been 5% over the past year and is up 3.4% in the first eight months of 2011,” Kusher says.

“Melbourne home values actually rose in raw terms by 0.2% and reported a much lower seasonally-adjusted decline of just 0.2%. It will be interesting to see whether this trend continues as the spring selling season kicks off.”

RP Data and Rismark argue that home owners should watch total returns rather than just capital gains, saying that while home owners who let their house receive rents in dollar terms those who own their homes “save the market rent….This is the same as a business owning and occupying a building,” they say.

RP Data reported that strong rental growth rates combined with slowing dwelling value declines have seen home owners realise positive ‘total return’ growth in August (+0.2%).

Total returns have been positive – 3.4% in Sydney for the year to date and 1.8% in Darwin.

But results haven’t been so positive in other cities, with Melbourne down 2%, Brisbane 1.6%, Adelaide 1.8% and Perth 2%.

One positive was rental results, with RP Data noting that gross rental yields were at 5% in August for units while houses were at 4.3%. On a total return basis, with capital growth plus rents, capital city dwellings were up 0.2%.

Rismark economist Christopher Joye said the current economic environment has changed, with major banks forecasting rate cuts by the end of the year, adding that the market will be the beneficiary of any of those reductions.

Joye says any change in interest rates will create a better environment for consumer sentiment, which may have an impact on prices.

“According to NAB’s latest survey, only 20% of people now expect interest rates to be higher in 12 months’ time compared to a stunning 70% of people in June. This will likely provide support for housing sentiment,” Joye says.

“A number of leading indicators point to more positive portents. For example, Australia’s largest mortgage broker AFG reported the largest number of new housing finance applications in August for 18 months.”

But Joye notes that RP Data and Rismark remain more concerned about inflation and suggests that interest rates will not fall to 3.5% or less during the next 12 months.



icon-podcast-large

SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

icon-email-large

PREFER TO SUBSCRIBE VIA EMAIL?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Avatar for Property Update

About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'House prices slip again' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*

facebook
twitter
google
0
linkedin
0
email

Michael's Daily Insights

Join Michael Yardney's inner circle of daily subscribers.

NOTE: this daily service is a different subscription to our weekly newsletter so...

REGISTER NOW

Subscribe!