June Property Market Update – according to Westpac

The Westpac Bank has just released its latest residential property market update report that gives a good overview of what’s happening in the residential property markets around Australia. Here is a summary:

What’s happened to property values?
Westpac reported that the Real Estate Institute of Australia’s 2010 Residential Market Facts for the first quarter indicates that nationally, average median house prices increased by 0.8% over Q1 2010, which is lower than the 4.2% quarterly increase reported by Rismark.

On a state basis, REIA suggests Q1 house prices increased in Adelaide (4.5%), Perth (3.1%), Hobart (2.8%), Sydney (1.4%), Darwin (1.3%) and Brisbane (0.9%) while prices fell in Melbourne (-2.0%) and Canberra (-0.2%).

The REIA indicates that national median house prices are now 18.7% higher than a year ago, which, according to REIA, is the highest annual increase since September 2003.

Melbourne has recorded the largest annual growth of 29.3%, followed by Hobart (20.8%), Darwin (20.2%), Perth (16.3%), Sydney (14.8%), Brisbane (14.0%) and Canberra (9.3%).

We know that property prices are affected by supply and demand- so let’s look at what has Westpac has to say about these…


HOUSES: On a seasonally adjusted basis national dwelling approval numbers for houses have been trending downwards recently, with numbers down by -3.8% on a 3-month rolling basis. April was no exception to the trend, recording a monthly fall of 13.5%. Despite the recent decline in numbers, annual approvals for houses in April were 18.9% higher than a year ago.

On a state basis, monthly housing approval growth declined across all States. The largest declines were recorded in VIC (-23.8%) and SA (-15.3%). The remaining states saw declines of between -2.5% (WA) and -9.4% (NSW).

APARTMENTS ETC: After increasing by a huge 58.3% in March, national approval levels in April recorded a minor correction, falling by -5.4%. Despite the monthly fall, approvals for other dwellings have increased by 13.0% on a 3-month rolling basis although annual levels still remain slightly lower than a year ago, by -0.5%.

On a state basis, approval numbers for other dwellings were mixed in April. QLD and VIC recorded growth of 7.7% and 2.8% respectively, while falls were recorded in WA (-47.6%), NSW (-27.9%) and SA (-11.0%).

On a seasonally adjusted basis the number of finance commitments to construct or buy new dwellings declined for the sixth consecutive month in April, falling by -1.8% although remain 7.5% above the long term average. Annual commitment numbers for new dwellings are 38.6% higher than a year ago.

Finance commitments also remained weak for existing dwellings, as numbers fell for the seventh consecutive month, by -0.1%. Despite the weakness for much of the last 6 months, annual commitment numbers for existing dwellings are 7.7% higher than a year ago.

National price adjusted investor finance levels continue to gain momentum, increasing by 1.2% in April, after growth of 7.7% in March. Investor finance levels are currently some 31.0% higher than long term average levels. On a 3-month rolling basis, VIC has recorded the largest growth of investors, by 16.9%, followed by NSW (13.5%), QLD (13.5%), SA (13.0%) and WA (10.3%).
There are lot’s of numbers and facts, but in summary our property markets have performed well over the last year but there are now a number of indicators that the markets are slowing and will remain more subdued in the months ahead.

In particular finance approvals, which are a leading indicator, keep falling suggesting that there will be fewer owner occupiers in the market over the next few months. On the other hand investors are back in the market, and they will take up some of the slack.

Source for much of the information: Westpac Property Monitor June 2010


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