Economy

Sydney and Perth house prices fall behind

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Sydney and Perth have fallen behind the other capital cities to become the nation’s house price underperformers over the past year, a new house price survey has revealed.

Sydney and Perth have fallen behind the other capital cities to become the nation’s house price underperformers over the past year, a new house price survey has revealed.

According to the RP Data/Rismark International Property Value Index, a significant gap has emerged between the house price growth enjoyed by most home owners around the country and their counterparts in the one-time property boom-towns of Sydney and Perth.

Perth was the worst performing housing market in the country in the 12 months to May 2008, with average house prices going backwards by 1.2%. Sydney home owners faired slightly better, with marginal average price growth of 2.8%, but still languished well behind national average price growth of 7.1%.

There is then a big jump to the next grouping of capital cities, Darwin, Canberra and Melbourne, with 8.3%, 8.7% and 10.9% growth respectively for the year. There is then another jump to the two cities leading the pack: Brisbane, with 13.5% growth, and Adelaide, where prices have risen 20.1%.

But the ability of the stronger housing markets to sustain their position in the months ahead is far from assured, with new data released today showing new home sales falling across the country.

According to the Housing Industry Association, the number of new homes and units sold in Australia fell 5% in May, with the biggest falls in NSW (9.4%), Victoria (6.8%) and Western Australia (4.9%).

Even the stronger states of Queensland and Adelaide didn’t escape the decline in conditions, falling 2% and 2.7% respectively.

HIA chief economist Harley Dale says declining confidence and successive interest rates rises are key explanations for the fall.

“Higher cost of living and monthly mortgage servicing obligations will continue to weigh on home buying sentiment and new home building activity over 2008/09,” Dale says.

The weakness in Australia’s housing market is also reflected in auction clearance results from the weekend. Just on 50% of properties up for auction in Sydney sold, down from 53% the preceding weekend, while 28% of properties in sold Brisbane, down from 29%.

House price growth leader Adelaide experienced the biggest boost in auction clearance rates, up 53% to 68%, while Melbourne regained some lost ground with an auction clearance rate up 3% to 65%.

 

Read more on property prices and auction clearance rates.

 

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