The Adviser

RESIDENTIAL PROPERTY - Property set to rebound?

The Australian residential property market will bounce back in 2012 – at least, that’s the word from RP Data

THE LATEST RP Data-Rismark Home Value Index shows capital city home values had their best result in seven months – down just 0.2 per cent.

Meanwhile, regional house values actually managed to increase, growing 0.1 per cent.

The Index shows September’s monthly decline was actually the smallest since February and was crucial in reversing a trend of accelerating capital losses since end March 2011.

On an even more positive note, strong rent growth, which according to the Australian Bureau of Statistics expanded by 1.2 per cent in the September quarter and by 4.6 per cent over the year, has meant gross total returns for home owners have actually been positive.

Rismark’s executive director Christopher Joye says interest rate fears have kept potential home buyers on the sidelines for most of 2011.

However, if rates move downward in 2012, that would kick off a recovery in housing activity, Mr Joye says.

The Index also shows that the two worst performing capital cities in September were Canberra and Sydney, suffering falls of 0.5 per cent and 0.6 per cent respectively.

This represents a reversal of sorts, given Sydney and Canberra have had the shallowest peak-to-trough falls of all the cities.

“Over the first nine months of 2011, capital city home values are down 3.6 per cent with the largest falls registered in Brisbane (5.6 per cent s.a.) and Melbourne (5.2 per cent s.a.). The most resilient markets continue to be Canberra, Darwin and Sydney where values have fallen by a very modest 0.5 per cent, 1.5 per cent and 1.7 per cent, respectively,” Mr Joye says.

“Between January 2007 and January 2011, Melbourne house values were up 49 per cent; in 2011 they were down by about five per cent. This is possibly because they overshot fundamentals in the prior period.”

“Housing market conditions are starting to show some green shoots now, at least at a macro level.”

“Auction clearance rates have remained relatively stable around the 50 per cent mark across... Melbourne and Sydney,” adds RP Data’s research director, Tim Lawless.

“The average selling time for private treaty sales remains below two months across the combined capital city markets, and vendors are providing a slightly lower level of discounting.”

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