House prices show stability

10 December 2004

Reports of double digit house price falls in the September quarter have not eventuated, according to a recent review of Australian house prices.

Figures released by the Australian Bureau of Statistics show that house price rises in Perth, Adelaide, Darwin and Canberra were only just offset by falls in Sydney, Melbourne and Hobart.

The weighted average established home price fell by only 0.7 per cent in the three months to September 2004 to still be up 8.2 per cent over the year.

Australia’s peak building industry body, HIA, said that it’s still early days but the house price crash fears of earlier this year appear to be unfounded particularly given the favourable outlook for interest rates, record low unemployment and robust housing demand from solid overseas migration.

HIA’s Chief Economist, Mr Simon Tennent, said that the urgency has gone out of the home buying market which has lowered auction clearance rates, extended selling times, and seen vendors re-adjust their pricing expectations.

“Clearly the setting of interest rates next year holds the key to whether prices will fall much further but in the meantime today’s figures should be welcomed by Australia’s home owners as the spectacular capital gains of past years look like they will remain mostly in tact,” Mr Tennent said.

On a city by city basis, over the quarter prices fell in Sydney by 2 per cent, Melbourne by 1.6 per cent, Brisbane by 0.2 per cent, and Hobart by 2.2 per cent. House price increases were recorded in Perth up 3 per cent, Darwin up 3.8 per cent, Adelaide up 1.3 per cent and Canberra up 0.6 per cent.

For brand new homes (excluding land cost), prices rose over the quarter in all cities. The biggest increase was recorded in Darwin, up 2.8 per cent followed by Perth up 2.3 per cent, Hobart up 1.8 per cent, Melbourne up 1.4 per cent, Sydney up 1.2 per cent, Brisbane up 0.6 per cent, Canberra up 0.5 per cent while prices remained unchanged in Adelaide.