Real Estate- Aussie house prices drop

Will the rest of Australia go the same way, will we follow or just places like Nelson, Queenstown, etc?

House prices on east coast fall further

November 7, 2005 - 6:39PM

House prices on the nation's eastern seaboard continue to fall, backing up the Reserve Bank of Australia's (RBA) view that the market remains subdued.
New figures show house prices declined in four of the seven capital cities measured by Australian Property Monitors (APM) during the September quarter.
Canberra recorded the largest quarterly fall, with prices declining by two per cent to a median price of $401,000, followed by Sydney, where prices decreased by 1.5 per cent to $520,000.
Sydney house prices are now down 8.9 per cent from the peak recorded in the March quarter 2004, the sharpest decline for any of the measured capital cities since the downturn commenced in early 2004.
Sydney also recorded the largest decrease in median unit prices, with a fall of 2.3 per cent in the September quarter.
Median house prices dropped by one per cent to $339,000 in Melbourne and fell by 0.9 per cent to $319,000 in Brisbane, according to APM's composition-adjusted median house prices series for the quarter.
"In terms of prices, the eastern seaboard of Australia continues its downturn," APM research director Louis Christopher said.
But Darwin house prices surged by 7.9 per cent to $338,000 in the September quarter and Perth prices rose 2.4 per cent, also to $338,000, while prices in Adelaide were flat at $302,000.
In its quarterly statement on monetary policy, the RBA said the data suggested nationwide prices fell modestly in the quarter but were broadly unchanged over the year.
"Recent auctions data are consistent with conditions in the housing market remaining subdued," the central bank said.
"Over the past few months, clearance rates in Sydney and Melbourne have fluctuated around levels considerably lower than their averages over the past five years, and auction volumes remain low."
The RBA said forward-looking indicators of housing activity pointed to some near-term easing in construction, noting the number of building approvals had declined by 12 per cent in the third quarter.
"Nonetheless, with further large amounts of work yet to be done, especially in the more buoyant states, the current downturn in house building activity is likely to be shallow by the standards of previous cycles," it said.
The RBA said growth in credit to the household sector had eased back from the exceptionally rapid pace seen a couple of years ago, reflecting the cooling in the housing market and the more cautious approach to spending and balance sheet expansion that households now seemed to have adopted.
Mr Christopher said that assuming interest rates remained steady for at least the next 12 months, the eastern seaboard market - including Sydney, Melbourne, Canberra and Brisbane - was likely to bottom out sometime in the first half of 2006.
"Given statements made today by the RBA, this scenario of zero interest rate increases appears to be quite plausible," he said.
"Of course, much depends on future oil prices and whether core inflation is likely to build in the coming months."
On Sunday the managing director of lending giant Aussie Home Loans, John Symond, said Australians should get out of property investment markets on the eastern seaboard, particularly in Sydney.
The APM house price series is adjusted for a potentially disproportionate number of sales occurring at the top or bottom end of the market which would unduly influence the raw median.