Statistics for a soft real estate market landing - not a crash

31 July 2004

All year we've waited for the axe to fall, but if real estate agents have got their data right then housing markets across Australia are having a soft landing and not the crash we expected.

At a time when speculation about supposed free-falling prices, especially in Sydney and Melbourne, has encouraged the sceptics, there's now an emerging body of evidence that Australia-wide prices are far from crashing.

Today, Melburnians are waking to Real Estate Institute of Victoria claims that house prices fell by only 2.8 per cent in the June quarter, and 3.5 percent for the first half of the year to a new median price of $357,000.

During the week, the Real Estate Institute of West Australia produced June quarter figures for Perth showing a fall of only 1 per cent -- from $242,800 to $240,400 -- the first drop in four years.

Last Saturday its Queensland equivalent flagged a quarterly fall of only 2.5per cent, which should give Brisbane a new median price of $346,000.

Earlier this month, the Real Estate Institute of South Australia reported a quarterly rise of 3.2per cent for Adelaide, giving the city of churches a new median of $258,000 -- a 17 per cent rise in a year.

Now the big question is what happens when Sydney figures are released at the end of August?

Normally the figures would be out now but the Real Estate Institute of NSW has delayed the release to avoid a repeat of the recent confusion that arose from conflicting house price data.

"We want to make sure we get our figures right," said REINSW president Rowen Kelly.

REI state representatives from around Australia met in Canberra on Thursday to formulate national guidelines for the collection of house price data.

Kelly says the adoption of those guidelines should make future data more reliable, adding that home owners should like what they are going to hear. He hints at a slight rise in house prices, with apartments likely to remain unchanged.

He says it's ironic that owners fearing a downturn are in fact helping to push up prices because their reluctance to sell is causing stock shortages.

And while that was obvious in Melbourne, it was even more so in NSW where 10,000 first-home buyers sought stamp duty exemptions in the first three months of the scheme.

For REIV chief executive officer Enzo Raimondo, the latest Melbourne figures are simply an expected correction as the market gradually settles into a new property cycle after six years of substantial capital growth.

Predictably, Toorak was Melbourne's most expensive suburb with a new median house price of $1.53million, but the surprise was that it recorded the city's biggest quarterly jump, up by 12.5 per cent from $1.36million.

The REIV predicts that while Melbourne prices are likely to remain flat, growth will be limited to established properties close to the city and in beach areas.

Reproduced from The Australian newspaper, 31 July 2004.