Dwellings located in the cheapest pockets of Australia’s capital cities are performing the strongest of all capital city market segments, according to the latest RP Data/Rismark Hedonic Home Value Index.
The latest index found Australian dwelling prices continued their decline in April, with capital city dwelling values declining 0.3 per cent, seasonally adjusted, for the month and 1.2 per cent for the quarter.
In the 12 months ending April, Australian capital city values are now down 1.5 per cent, seasonally adjusted.
According to RP Data research director Tim Lawless, sinking top end suburbs contributed significantly to the result, while cheaper suburbs largely held their ground.
Over the year to end April, dwellings in the most expensive 20 per cent of capital city suburbs recorded a 5.4 per cent decline in values.
In contrast, values in the middle 60 per cent of suburbs were down by only 0.9 per cent while dwellings in the cheapest 20 per cent of suburbs hardly moved, slipping just 0.5 per cent for the year.
“The solid performance of cheap suburbs runs against the grain of poplar claims that default rates are rocketing up amongst first time buyers, which the RBA recently rejected,” Mr Lawless said.
The luxury end of the housing market was showing volatility, he said.
“During the growth phase of the cycle the most expensive homes realised the highest capital gains. Yet as the market cools, premium home values seem to be losing steam the fastest.”
Should the RBA increases interest rates another one of two times this year, which is widely predicted, RP Data and Rismark forecast that prices will remain soft throughout 2011 and likely register some modest losses.