ABS: Aussie home prices fell in March quarter

By
Chris Zappone
October 16, 2017
house prices

Australian home prices have fallen the most since the financial crisis, according to official statistics out today that back up recent private sector reports pointing to a cooling in the housing market. Melbourne and Brisbane led falls.

The weighted average home price in eight capital cities fell 1.7 per cent in the March quarter, compared with the previous three months, the Australian Bureau of Statistics reported today. The decline was the biggest since the September quarter of 2008.

From a year earlier, prices were down 0.2 per cent, the ABS reported.

Both the quarterly and annual price moves were worse than expected. Analysts had tipped prices would drop 0.5 per cent in the first quarter but post a 1.6 per cent gain in the year to March 2011, according to Bloomberg data.

The Australian housing market has cooled considerably in 2011 compared with last year, as higher interest rates, worries about the economy, and affordability problems put would-be buyers off. The Reserve Bank is widely expected to leave interest rates on hold when its board holds its monthly rates meeting tomorrow.

The fall in Melbourne’s home prices of 2.5 per cent in the quarter matched flood-hit Brisbane, which experienced the same pull back, ABS data show.

In Sydney prices dropped 1.8 per cent, while in Adelaide they slipped 1 per cent. 

However, prices rose 0.5 per cent in Perth and 0.4 per cent in Hobart in the quarter, the ABS said.

Expectations key

Most people had already expected a weaker quarter based on weak home loans and sinking building approvals, said JP Morgan economist Ben Jarman.

“For the rest of the year we have a flat profile for home prices, with the RBA continuing to raise interest rates against the backdrop of rising household incomes,” he said.

“With the housing market, expectations are very important,” said Mr Jarman. “It’s going to be very important how the average person views information like this.”

“If they see this as an opportunity they’re going to come in and support prices but if there’s a widespread perception that the housing market is facing more intense headwinds those people might sit out,” he said.

“In the rest of the year demand isn’t going to be really strong,” said Mr Jarman.

Cooling market

Capital city house prices posted a sharp rise in the aftermath of the financial crisis, helped by 49-year low interest rates as well as government and state stimulus packages aimed at first-time buyers.

The closely watched values of Australian homes have also been aided by a chronic shortage of housing, which has eroded affordability.

Some offshore commentators have also raised doubts about the health of the local housing market after witnessing double-digit prices falls in the US, UK and elsewhere in Europe.

Property information research group RP Data-Rismark said last week that national home prices on a quarterly basis sank 2.1 per cent in the March quarter – the biggest decline since the data series was first collected in June 1999.

Auction clearance rates in Melbourne were 50.5 per cent last weekend, well down from the 78.4 per cent the same time last year, Australian Property Monitors reported. Sydney’s auction clearance rate was 53.9 per cent last weekend, down from 71.4 per cent at the same time a year ago.

Clearances rates have slumped as the stock of houses for buyers to choose from swells.

Property data firm SQM Research last month the stock of houses and units on the market has risen 45.5 per cent in the year to March to 356,600 properties nationwide.

“The question in prices is on the supply side is: Do people really need to sell their home?,” JP Morgan’s Mr Jarman said.

Mr Jarman said that if sellers withdraw properties from the current market, the resulting shortage could provide a floor for prices.

The ABS data for March compares with revised figures for the December quarter, which showed home prices rose 0.8 per cent for the three months and 5 per cent for the year.

czappone@fairfax.com.au

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