ECONOMY - Signs of life?

We may be nearing the bottom of the property cycle, RP Data reports

The most recent RP Data-Rismark Hedonic Home Value Indices showed a seasonally-adjusted (s.a.) fall of -0.2 per cent in capital city home values over the month of June.

While the June result was technically the sixth straight monthly correction in capital city home values, the rate of decline has been moderating since January.

Over the June quarter capital city home values were down by 0.9 per cent on a seasonally-adjusted basis. The year-on-year results show capital city home values off 2.0 per cent.

The modest overall decline in national dwelling values conceals considerable variation across the capital cities. For example, whereas Brisbane and Perth home values are down 6.3 per cent and 4.7 per cent, respectively, over the last twelve months, property values in Sydney are up 0.5 per cent.

A similar pattern of a slowing rate of dwelling value declines has been found in the ‘Rest of State’ markets, which includes the 40 per cent of homes located outside the capital cities.

According to RP Data-Rismark’s Rest of State Index, house values were down 1.6 per cent (s.a.) in the first quarter of 2011, and a lower 1.2 per cent in the June quarter.

According to Mr Lawless, the weak regional performance can mostly be attributed to the Queensland and Western Australian markets.

“Fragile regional conditions are likely to be most concentrated within the ‘lifestyle’ centric markets along the coastline rather than the resource-driven areas where housing markets remain quite healthy,” he said.

Unit markets have continued to outperform detached houses, with unit values recording no change in value over the June quarter compared with a 1.2 per cent fall in (more expensive) house values.

Mr Lawless said the variation in performance betwenn the two housing types comes back to affordability.

“Across the combined capital cities, median unit prices are $67,000, or 14 per cent, lower than the median house price. With more Australians seeking to live closer to the city and transport nodes, as well as seeking out more affordable housing options, the superior performance of the unit market makes sense.”

Subject to the course of interest rates, market conditions appear to be stabilising after the declines recorded over the last year.

“The average selling time reached a high of 58 days back in March and is now down to 52 days. In contrast, the level of vendor discounting has risen to 6.8 per cent in June as vendors become more willing to meet market price expectations,” Mr Lawless said.

Rismark’s Mr Joye added, “Patient folks opportunistically investing in housing are probably going to find the best prices, and valuation fundamentals, that they will have had access to in a long time.”