Continuing price growth but clear signs housing market is softening

9 January 2004

The housing market was already beginning to soften before the two recent interest rate rises, according to September quarter 2003 figures published by the Real Estate Institute of Australia (REIA) in Market Facts and released in December.

“The September quarter figures confirm that while there was continuing price growth, the rate of growth in median house prices was slower compared with the June quarter 2003 rate of growth in Sydney, Melbourne, Brisbane, Adelaide and Canberra. A similar comparison of annual price growth rates showed that median house price growth had eased in Sydney, Adelaide and Canberra,” says Kareena Ballard, President of the Real Estate Institute of Australia.

Quarterly growth in median house prices in the September quarter 2003 ranged from 1.1% in Sydney to 9.2% in Hobart, whilst annual growth ranged from 3.4% in Darwin to 30.7% in Canberra.

Indications of weakening residential prices were even more pronounced in the flats/units/townhouses sector of the market. A comparison of percentage price changes between June quarter and September quarter 2003, and between September quarter 2002 and September quarter 2003, showed a softening for Sydney, Brisbane, Adelaide, Canberra and Darwin.

Quarterly growth in median flats/units/townhouses prices ranged from –11.9% in Darwin to 39.6% in Hobart, while annual growth ranged between –1.4% in Darwin to 85.4% in Hobart.

“Since the close of the September quarter 2003, there is anecdotal information from many Real Estate Institute members in most States noting that attendance at open houses and auctions has declined markedly since the two interest rate rises.

“We urge the Reserve Bank to exercise caution and wait until December quarter 2003 figures are available before considering further interest rate rises. It is important that the response on interest rates is appropriate to what is actually happening in the market place,” says Mrs Ballard.