31/08/2011 - 11:43

New month, same results for residential property

31/08/2011 - 11:43

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New month, same results for residential property

Residential property values in Perth continue to fall, dropping 1.1 per cent in July for a median house price of $455,000, according to market analysts RP Data.

The result puts the year-on-year price fall to 6.3 per cent, making Perth the country’s second worst performing capital city, trailing only Brisbane, which has seen its median values drop 6.6 per cent.

Sydney and Canberra bucked the soft trend to rise 0.5 per cent and 1.9 per cent, respectively, over the year.

Across capital cities, home prices have fallen by 2.9 per cent over the past year, as consumer caution, financial market volatility and poor business conditions outside the resource sector impacted sales.

In a further sign of soft market conditions, the average time it takes to sell a capital city home has risen to 55 days from 45 days a year ago.

The RP Data-Rismark Hedonic Home Value Index fell by 0.6 per cent in July, seasonally adjusted, the seventh straight monthly fall in capital city home values nationally.

Regional markets fell by 0.7 per cent in July, for a decline of 2.4 per cent year on year.

Rismark International economist Christopher Joye said the housing market was patchy, with the decline unevenly spread among capital cities.

RP Data research director Tim Lawless said current housing market weakness reflected poor consumer confidence and in particular the anxiety consumers have about the future of their finances.

"According to the August Westpac-Melbourne Institute Consumer Sentiment survey, Australians still expect two rate hikes over the next 12 months," Mr Lawless said.

"Combined with volatile equity prices, global financial market instability and soft house prices, Australians are understandably reluctant to make high commitment decision at the moment."

Mr Joye said he expected Australia's housing market to find its feet if the Reserve Bank of Australia left interest rates on hold, or began cutting, but that was unlikely.

"If the RBA has really come to the end of its tightening cycle - which we would find surprising given the high core inflation revealed over the last six months - 2011/12 will likely be judged one of the best buying windows seen in some time," Mr Joye said.
Home values fell most sharply in the premium housing sector, which has lost 6.2 per cent this year, compared with a 2.1 per cent decline in the cheapest suburbs.

"Clearly the ongoing financial market volatility is having a more marked impact on wealthier households, as are weak business conditions outside of the resources sector," Mr Lawless said.

The level of vendor discounting expanded to -7.2 per cent in July, from -5.7 per cent in July last year.

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