• 24/07/2024

House Prices Falling, But Not So Fast


HOUSING prices are following the usual early-winter pattern – heading lower.

But for those hoping prices will recover from their usual lull, there are some positive signs that the low point is near.

Market analysis firm RP Data’s monthly measure of prices, the RP Data-Rismark May Hedonic Home Value Index, fell by 1.9 per cent for the state and territory capitals in May.

A fall of that size is typical of the pattern for May seen in the past couple of years.

Annual growth remains strong, particularly in Sydney where prices in May were up by 16.6 per cent from a year earlier, and Melbourne with an annual gain of 9.9 per cent.

At the other end of the scale, prices in austerity-affected Canberra were up by only 2.6 per cent, while Hobart prices were up only 1.4 per cent through the year.

If the usual pattern is to be followed, by the end of June prices should be just about back up to where they were before the downturn through May.

The recovery hasn’t started yet, but the descent does seem to be slowing.

RP Data’s weekly measure of prices, limited to the five mainland state capitals, fell by 0.3 per cent in the week to Sunday.

In the week before that, prices fell by 0.6 per cent, and in the week before that the fall was 0.9 per cent.

That’s the type of pattern seen this time last year and the year before – a slowing rate of decline.

Of course, there’s no guarantee that the market will bounce back.

Consumer confidence is at a low ebb after the shock of the budget.

And building approvals – including both residential and non-residential – in April were running at a level $2.3 billion below the final quarter of 2013, according to data from the ABS on Monday.

Against the background of a fading mining investment boom, that suggests the economy could struggle to sustain enough growth to stop unemployment from rising further this year, further undermining confidence and sapping demand for housing.

But, so far, so good.

RP Data’s weekly survey of auctions shows clearance rates averaging 68.1 per cent, the highest for a couple of months, rising in May as it normally does ahead of the June price recovery.

The apocalypse may be coming, and it’s not hard to find people warning that it’s nigh, but there’s no real sign of it just yet. 

Read Previous

Making heads or tails of Australia’s economic strategy

Read Next

House Price Drop Good for Buyers and The Reserve Bank

Accredited Broker