Capital city prices fell by 0.2% during September, the best result in seven months, with regional home values rising by a seasonally adjusted 0.1%.
The result comes as the property market eagerly awaits tomorrow's Reserve Bank board meeting, where economists predict interest rates will be cut by 25 basis points. Experts say such a move would encourage buyers and stimulate prices.
"Notwithstanding the extraordinary hysteria whipped about house price bubbles and so forth, the fact is that gross return of 0.7% generated by Australian housing in 2011 is very reasonable in the scheme of things," says Rismark managing director Christopher Joye.
"Indeed, it looks positively attractive compared to the extreme volatility, and stunning losses, sharemarket investors have had to endure."
Overall, home prices fell by 0.2% in the month of September, which was the smallest fall since February and, according to RP Data and Rismark, "crucial in reversing a trend of accelerating capital losses since end March 2011".
Over the first nine months of the year, capital city home values were down by 3.6%, and in the last 12 months, values have fallen by 3.4%.
During the quarter, Hobart suffered the worst decline with a 6.6% decline, followed by Melbourne down 2%, Perth down 1.3%, Brisbane down 1.2%, Sydney down 0.8% and Canberra down 0.9%. Adelaide values fell by 0.7%
Darwin has been the best performing city with values down just 0.3% over the quarter, also winning in rental yields with a gross of 5.3% for houses and 5.8% for units. The lowest yields were in Melbourne, with a gross of 3.8% for houses and 4.3% for units.
However, over the last month some results have improved. Brisbane values rose by 0.4%, Adelaide by 0.5%, while Darwin prices remained flat.
Sydney values fell by 0.6%, Melbourne by 0.3%, Perth by 0.1%, Canberra by 0.5% and Hobart by 4.8%, although Joye says buyers should take heart from the results – especially if the RBA cuts rates tomorrow.
"Rismark forecasts imply that a reduction in interest rates on Tuesday, which could see discounted variable home loan rates fall to as low as 6.6%, would kick-off a recovery in housing activity."
RP Data's Tim Lawless also writes that the two worst performing cities were both Canberra and Sydney, down 0.5% and 0.6% respectively, but notes this is somewhat of a reversal.
"Housing market conditions now are starting to show some green shoots, at least at a macro level. While the September index declined further, the 0.2% result was the best outcome we've seen in seven months."
However, any recovery may be awhile off as buyers are still in charge. Joye points out that 300,000 homes are advertised for sale right now – more than 30% higher than during the same time last year.
"Melbourne supply is especially plentiful, with listing volumes more than 60% higher than a year ago. The large number of properties available for sale implies buyers will continue to hold the balance of buyer at the negotiating table."
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I predicted softening of house prices 2-3 years ago but not for the reasons anyone in Australian property spruiking business ever mentioned, and there is potential upside (helping to maintain prices and rental income especially for property investors) after 2012 for opposite reason but similar driver that will be somewhat reversed.
Interesting that the property industry and media have missed it completely...... :)