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Average property prices fell in Australian capital cities in December

It means that on an annual basis residential prices are now down by 4.8% and prices are not expected to fall much in 2012.

The quarterly figures show there was considerable regional variation in prices. Prices fell by 1.6% in Melbourne and Adelaide, by 1% in Sydney, by 1.3% in Brisbane and by 1.4% in Darwin. They increased by 0.5% in Perth, by 0.7% in Canberra and by 0.8% in Hobart.

‘Today’s update does bear some resemblance to the annual declines evident in late 2008 and early 2009,’ said Harley Dale, chief economist of the Housing Industry Association (HIA), the voice of Australia’s residential building industry.
 
‘There are, of course, enormous variations in house prices within and across cities and regions in Australia, but as was the case in 2008/09, the widespread price plunge portended by some for 2011 predictably never emerged,’ he explained.

He believes that lower interest rates will feed into an improved environment in 2012. ‘Although we won’t see a return to widespread strong house price growth,’ he added.
 
The capital city project new)house price index rose by a bare 0.2% in the December 2011 quarter to be up by 1.5% on a year earlier.
 
Across capital cities, in the December 2011 quarter the project new house price index increased by 0.7% in Sydney, 0.1% in Adelaide, 0.4% in Perth, and 0.1% in Darwin. Prices were flat in Brisbane, Hobart, and Canberra, and fell by 0.3% in Melbourne.

New home sales are also falling. The HIA JELD-WEN New Home Sales Report, based on a survey of Australia’s 100 largest builders, showed a decline of 4.9% in total seasonally adjusted new home sales in December 2011.
‘New home sales were essentially flat over the December 2011 quarter, inching up by 0.2%.. Meanwhile, building approvals will record a fall for the December quarter and new home loans will likely do the same,’ said Dale.

Detached house sales fell by 7.7% in December 2011, but rose by 2.1% over the quarter. Multi unit sales jumped by 29.4% in the final month of last year, but dropped by 15.7% over the December 2011 quarter.
The volume of detached house sales declined in three out of five mainland states, falling by 4% in New South Wales, 10.5% in Victoria, and 20.5% in Queensland. Sales increased by 12% in South Australia and by 6.8% in Western Australia.

‘The intensification of bad news regarding Europe, question marks over labour market prospects in Australia, and avoidable delay and uncertainty as to whether banks were going to pass on the Reserve Bank’s second rate cut conspired to drive a fall in new housing contracts as the holiday season approached,’ explained Dale.
 
‘Weakness in the new home building sector reflects a combination of subdued demand and an excessive cost base driven by high and inefficient taxation, the latter of which was further highlighted in 2011 by the modest decline in existing property values. Short term monetary and fiscal policy stimulus together with a revitalised programme of longer term structural reform is required in early 2012. Such action would instil confidence in the sector during what is a very good time to build a new dwelling for those who are financially set to take that decision,’ he added.

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