Capital city dwelling values fell by a seasonally adjusted 2.1% in the first quarter of the year, according to the latest RP Data-Rismark Home Value Index.
The quarterly change was the steepest since the index series began in June 1999, RP Data research director Tim Lawless said.
The index also shows that prices were flat in the month of March and down 0.6% over the past 12 months, with the national city dwelling value median price at $455,000.
The capital city average for property values have been pulled down considerably by the two weakest performers, Brisbane and Perth, down 4.6% and 3.4% respectively in the first three months of the year the survey also shows.
Lawless said that prices are being dragged down by a recent rapid build up of housing stock into the market. ‘The amount of properties being advertised for sale is about 30% higher than what it was last year,’ he revealed.
With more dwellings available for sale, prospective buyers are negotiating for lower prices much more than they used to. ‘The simple fact that there's so much stock to choose from for prospective buyers is resulting in more negotiation in the markets and buyers are having to sell at lower than what their expectations were,’ he added.
Seller are now selling properties about 6.5% lower than the original asking price on average, compared with about 5.2% the same time last year and recent extreme weather events, including the flooding in Queensland, may also be having an effect, Lawless believes.
‘Unsurprisingly, the flooding that has occurred within South East Queensland has likely compounded Brisbane’s weak market conditions,’ explained Lawless.
‘Also, you have the fact that interest rate speculation seems to be building, that they're going to be going up sooner rather than later, particularly with the CPI figures out just recently,’ he added.
The survey found that while residential properties may not have seen any capital growth over the past 12 months, many are seeing robust increases in rental yields.
In contrast to the fall in home values, gross rental yields have been improving with apartments and houses now delivering a gross return of 4.9% and 4.2% respectively in March 2011.
In the non capital city regions the story has been similar. In the year to the end of March 2011, values were relatively unchanged, down 0.5%. However, the March quarter was a weaker one, with house values declining by 1.8%.
