COLD water has been poured on the prospect for a quick recovery in the housing sector, after the latest data showed prices were still falling and new home sales declined for a sixth consecutive month in Western Australia.
Across Australia, capital city house prices fell 1.2 per cent in the September quarter, according to official data from the Australian Bureau of Statistics.
In Perth, the ABS said its price index fell by 1.3 per cent over the September quarter, a slight improvement on the June quarter’s revised 1.9 per cent drop.
The ABS figures almost match those of RP Data-Rismark’s quarterly look at median house prices, released on Monday, which reported a 1.5 per cent fall over the September quarter.
But RP Data reported prices nearly steadied in September, showing just a 0.1 per cent fall in median values.
Australian Property Monitors said last week home values in WA were down 1.6 per cent over the September quarter, for a year-on-year fall of 5.7 per cent.
But it was the Housing Industry Association’s New Home Sales report that has scotched any talk of a quick upturn in conditions for the new housing sector.
The report showed an Australia-wide decline of 3.5 per cent in September, with the month’s performance notching the lowest level of detached house sales since the end of 2000.
New home sales also fell by 3.5 per cent in WA over September, the sixth consecutive month of declines.
“It is an appalling situation to find that WA has again been ranked as the number one aggregate economy in Australia but continues to experience one of the weakest new home building markets,” the HIA report said
“New home sales are at their lowest level since November 2000 and detached house building approvals are 12 per cent below their decade average. This situation can’t continue.”
CommSec economist Savanth Sebastian said there was no turnaround in sight for the national housing market.
“We wouldn’t anticipate that to change anytime soon,” he said.
“It does seem the weakness is right across Australia and we think at the moment the housing sector is in a period of consolidation.
“One thing to point out is, you’re not going to get overly worried about the correction that is taking place, given the sharp run up in prices we had in the past few years.”
The Reserve Bank of Australia’s decision to cut rates by 25 basis points this week was not necessarily the panacea to ease the sector’s woes, according to Master Builders Australia.
Master Builders chief executive Wilhelm Harnish cautiously welcomed the cut, but said it would not be enough to fix the problems plaguing the building industry.
Mr Harnish said the rate cut would be welcome news for existing homeowners, but the industry faced more complex challenges.
“The immediate challenge for the building sector is to restore confidence to drive a private sector recovery in both the housing and commercial markets,” he said.
“The private sector housing recovery has been very weak and the industry is banking its hope on the rate cut helping boost confidence to flagging demand and stabilise an uncertain market.”
Private developer Nigel Satterley, however, held a more upbeat view. He said the cut in rates would quickly translate into a boost for retail and a much-needed stimulus in the lagging residential land and housing markets.
“There are clear indications that we are approaching the bottom of the current property cycle and it won’t be long before there’s a prolonged, soft recovery period,” he said.
“The announcement by the RBA has provided the extra stimulus needed to assist that recovery.”
