House prices continue to fall in June quarter

Property prices continue to fall as preliminary estimates show that the price index for established houses for the eight capital cities decreased 1.9% in the year to June quarter 2011.

Annually house prices decreased in Perth by 4.1%, Brisbane by 3.6%, Darwin by 3.0%, Adelaide by 2.1%, Melbourne by 2%, and Sydney by 0.7%.

The only two cities to record a rise were Hobart, where prices rose 2.8% and Canberra, where prices rose 2.2%.

In the June quarter the price index for established houses for the eight capital cities decreased 0.1%.

The capital city to decrease for the quarter were Perth, -1.0%, Adelaide -0.8%, Brisbane -0.3%, Melbourne -0.1%, Darwin -1.6%, and Hobart -0.1%.

Sydney prices were up 0.4% for the quarter, and Canberra’s prices were up 1.1% in the June quarter, the only two capital cities to record rises.

Westpac notes the official ABS measure of house prices was somewhat surprisingly more stable than private sector measures in the June quarter.

With prices down 1.9% for the year, it was a touch better than most private sector measures.

“The ABS index is not our preferred benchmark for prices or price inflation as it is prone to revision, only covers detached homes and often exaggerates price swings when there are compositional shifts,” Westpac says.

“Private sector measures suggest prices were a touch soggier in the June quarter with declines of between 0.6% quarter and 1.7% quarter.

“The variation across capital cities was consistent with private sector measures,” it notes.

Westpac notes that previous estimates had been revised.

The national index showed a 1.1% fall in the March quarter revised from the preliminary 1.7% fall published previously.

Monique Sasson Wakelin, managing director of property investment advisors Wakelin Property Advisory, says the index for the June quarter was further evidence that the dire predictions of a rout in property prices in 2011 had not occurred.

“Taking the capital cities together, property prices have fallen just 1.9 per cent over the last 12 months,” Sasson Wakelin says.

“After all the talk of ‘bubbles bursting’, a ‘collapse in prices’ and the ‘market in peril,’ we can see that nothing of the sort has happened. Rather, property prices have softened mildly in the last 12 months after a strong run in 2009 and early 2010.”

The latest ABS data reinforces evidence of a slightly softer market emanating from the commercial data providers, according to Sasson Wakelin.

“There is a great similarity between the results coming out ABS, RP Data, Residex and Australian Property Monitors. They are all reporting a small annual fall in national or capital cities prices of somewhere between 1 and 2%.”

Source: Wakelin Property Advisory

Sasson Wakelin says she hopes the recent data might give the property debate a less shrill tone. “There have been a few commentators out there who have enjoyed their Chicken Little role, predicting that the sky is falling in on property. It is not and less sensationalism from these parties would be a more credible position.”

“I anticipate the market will continue to track sideways until at least the end of 2011. Unless a major hike in interest rates or a GFC Mark II materialises, I expect this stability will underpin confidence and possibly give prices a lift in 2012 off the back of strengthening demand. Smart investors and first home buyers should be seizing the current opportunity.”