Home prices slump in June
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|Monday, 02 August 2010|
By: Staff Reporter
After 17 consecutive monthly gains, home values took a tumble in the month of June, falling 0.7 per cent with no growth over the June quarter, new data shows.
According to the RP Data-Rismark Hedonic Home Value Index, the latest seasonally adjusted figures represent the largest fall in home values since April 2008.
All capital cities except Adelaide experienced virtually no growth, or a decline in growth over the June quarter this year while on a seasonally adjusted basis, home values across the country's capital cities remained flat with a mere 0.1 per cent increase in the June quarter.
In Adelaide, dwelling values improved by a slight 1.1 per cent over the June quarter, seasonally adjusted. Despite the small growth, Adelaide has remained the cheapest of Australia's capital cities, with a median dwelling price of $390,000.
Sydney and Melbourne's median dwelling prices also improved in the June quarter, but ever-so-slightly. In Sydney, dwelling values grew 0.5 per cent bringing the median dwelling price to $512,000, while in Melbourne, dwelling values grew 0.2 per cent with a median price of $470,000.
Rismark managing director Christopher Joye said a "substantial deceleration" in housing conditions, coupled with a negligible rise in disposable household income, had also contributed to the property value slowdown.
"We do not expect to see the market rise much more over the remaining year subject to labour conditions and the course of monetary policy," Mr Joye said.
According to RP Data national research director Tim Lawless, the slowdown in home value growth is partly the result of rising interest rates.
"The June results confirm the slowdown that RP Data and Rismark have been predicting for some time as the RBA lifted the headline variable mortgage rate from 5.75 per cent in the GFC to 7.40 per cent."
Mr Lawless said the latest property value figures show the RBA's monetary policy strategy to keep rates on hold is proving effective.
"Combined with the latest inflation figures, the slowdown in the housing market vindicates the RBA's decision to put interest rates on hold since May 2010.
"With first time buyers finding it harder to access the market as affordability has deteriorated, a freeze in capital growth will offer prospective buyers some much needed breathing room," Mr Lawless said.