Residential property values have fallen across the country but a succession of rate cuts in coming months might just turn things around, writes RP Data’s Cameron Kusher
The September 2011 release of the RP Data-Rismark Home Value Index showed that property values across the combined capital cities fell by 0.2 per cent over the month, 1.3 percent over the quarter and 3.4 per cent over the year.
While property values fell by 3.4 percent over the most recent 12 months, at the same time last year capital city property values had increased by 8.6 percent.
The results also represent for the first time in this cycle that property values in each capital city recorded an annual fall ranging from 1.2 percent in Sydney to 9.1 percent in Hobart.
The premium housing market continues well and truly to underperform.
The 20 percent of most expensive capital city suburbs recorded a value fall of 6.4 percent over the year compared to annual value falls of 3.2 per cent among the most affordable 20 per cent of suburbs and a 2.8 per cent fall across the broad ‘middle market’ represented by the middle 60 per cent of suburbs.
Estimated sales volumes across the combined capital cities in August 2011 were 13 percent below the five-year average and ranged from being just 2 percent below the five-year average in Sydney to 35 per cent below average in Brisbane.
The fall in property values in September is commensurate with the fall in sales activity, as are increases to other lead indicators such as time on market and vendor discounting.
Of those houses that actually sold in September, the initial asking prices were typically being discounted by 6.4 percent to make a sale and were taking 56 days to sell.
At the same time last year, discounting levels were recorded at 5.8 per cent and houses were taking 46 days to sell.
These heightened levels of discounting and longer times to sell reflect weaker capital growth conditions and subsequent tougher selling conditions. In a nutshell, this is very much a buyer’s market.
Other indicators over the month further highlighted the weak conditions, with the total volume of properties available for sale 38 per cent higher than at the same time the previous year.
The combined capital city auction clearance rates in September also failed to break the 50 percent barrier in any week.