Australia’s housing market continues to track sideways, with the latest RP Data/Rismark national house price index showing national median prices increased just 0.3% in October.
Melbourne and Sydney posted gains of 0.6% during the month, while Adelaide (up 0.9%), Darwin (up 1.7%) and Canberra (up 1.8%) also performed well.
But the two states supposedly benefiting most from Australia’s new resources boom, Western Australia and Queensland, continue to underperform.
House prices dipped 1.8% in Perth in October and have now fallen 3.6% so far this year. In Brisbane, the prices fell 0.2% in October and down 0.9% so far in 2010.
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The RP Data/Rismark index shows national house prices have increased 4.3% across the first 10 months of 2010, which the firms say is in line with growth in disposable income.
But most of these gains were posted in the first half of the year – since May, house prices have fallen 0.7% across the country.
However, RP Data’s research director Tim Lawless says the falls could decline over the coming months as recent rate rises start to bite.
“Since the market started to cool in June the cumulative decline in dwelling values to the end of October has been less than one per cent across the capitals, suggesting a market that is slowing at a controlled pace. Of course, the October data doesn’t include any effect from the November interest rate rise, which we expect will have caused conditions to cool further.”
But while prices might have declined only slightly, Lawless says other indicators suggest it is clearly a buyers’ market.
He says the average selling time for homes sold by private sales has jumped from 39 days to 48 days, while average vendor discounts have increased from 4.1% to 7.5%.
“Capital city auction clearance rates are generally bobbing between 50% and 55% week to week,suggesting that vendors still need to adjust their price expectations in order to make a sale,” Lawless says.
“The escalation in stock levels is due to the combination of a higher than normal number of homes being added to the market at a time when market activity is slowing. The result has been a fairly rapid increase in the number of homes for sale. That’s great news for buyers who can take their pick and negotiate hard, but for sellers this is far from an ideal time to be listing your home.”
Lawless is looking back to the early part of the decade as a guide to what might happen over the next few years.
He says that following the property boom of 2000 to 2003, property values bounced along and rose just 4.7% between December 2003 and December 2005, although unemployment was higher than it is now and the resources boom was just getting started.
History suggests modest house price growth is likely, with falls likely to be limited.
“In the years ahead the RBA is forecasting very strong household income and employment growth. These two factors should help mitigate the impact of higher rate rises and prevent any material decline in prices,” Lawless says.