Once revered as a property market that managed to outshine the rest of the world during the global economic downturn it seems that high interest rates and uncertain worldwide economic conditions are finally having an impact.
In a further sign of soft market conditions, the average time it takes to sell a home has risen to 55 days from 45 days a year ago, the latest RP Data-Rismark Hedonic Home Value Index shows.
The index fell by 0.6% in July, seasonally adjusted, the seventh straight monthly fall in capital city home values nationally. Regionally prices fell 0.7% month on month and are 2.4% down year on year.
Brisbane has seen the steepest house price falls. Values dropped 0.4% in July to a median price of $420,000, seasonally adjusted. The fall brings the total decline in the city's property prices to 6.6% over the past 12 months, the worst in the country.
In Perth prices were down 6.3% year on year while Melbourne experienced a 4.3% fall. Sydney and Canberra bucked the trend to rise 0.5% and 1.9% respectively, highlighting the emergence of a multi speed national property market.
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,’ 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,’ he added.
Rismark International economist Christopher Joye said the housing market was patchy, with the decline unevenly spread among capital cities. He added that 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,’ he explained.
Property values fell most sharply in the premium housing sector, which has lost 6.2% this year, compared with a 2.1% 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,’ Lawless said.
