The rise in prices in Melbourne and static prices in Sydney is a tentative sign of a recovery in the housing market that is generally expected to gather momentum in 2012.
The latest figures from Australian Property Monitors show that Melbourne house prices rose by 1.1% over the final quarter of 2011 while prices in Sydney were flat after recording a fall of 1.8% in the previous quarter.
Although prices in other capital cities fell slightly the situation in Melbourne and Sydney were the principal contributors to a small rise in the national median house price during the December quarter.
‘Although the rise in the national median house price was modest, it was nevertheless the first increase recorded since 2010 and provides some hope that the national housing market is bottoming out after a generally subdued 2011,’ said Andrew Wilson, senior economist at Australian Property Monitors.
Adelaide and Hobart also recorded increases in median house prices each rising by 0.5% over the quarter. Canberra, Darwin, Brisbane and Perth all recorded falls in median house prices with Brisbane and Perth the underperformers with property prices falling 1.2% in both cities.
‘An improvement in housing affordability as a result of falling interest rates and subdued house price growth together with the continuing prospect of strong economic growth, particularly in the resource sector exposed states, should see most Australian capital city housing markets recover through 2012,’ added Wilson.
‘Early signs are already emerging of increased buyer activity in Sydney, Melbourne, Perth and Canberra,’ he explained.
The latest RP Data-Rismark index also suggests that prices may be reaching the bottom. It says that while house prices fell in every quarter last year the rate of decline slowed towards the end of 2011.
‘The December quarter was the year's smallest quarterly decline,’ said RP Data research director Tim Lawless.
Capital city house values fell nationally, in seasonally adjusted terms, in the last three months of 2011 by 0.5%, but this followed a larger decline in the previous June and September quarters of 0.8% and a more substantial national drop of 1.5% in the March quarter for 2011.
Sydney's house prices, the country's most resilient because of a shortage of housing, rose in the December quarter by 0.7%, according to the RP Data-Rismark figures.
In Perth values fell 2.1%, Melbourne was down 1.4%, Brisbane fell 1.3%, Adelaide was down 1.2%, Darwin fell by 1.1%, Hobart by 1% and Canberra by 0.1%.
‘One of the things we're expecting to see following the interest rates cuts last November is more activity,’ said Rismark managing director Ben Skilbeck.
‘We expect transaction volumes to pick up in February and March. We would expect the negative growth to abate,’ he added.
