Residential property prices in Australia are starting to fall with some cities seeing values fall while others experienced only marginal gains, the latest figures to be published show.
While nationally property prices have risen year on year by 11.9% to the end of April and are up 4.6% so far in 2010, during April some cities began to see a reversal.
Average prices fell 1.2% in Brisbane, 0.9% in Perth and 0.3% in Darwin. Other major cities saw only small prices increases including Sydney, up 0.3%, Melbourne and Adelaide up 0.8% and Canberra up 0.6%, according to the RP Data-Rismark Hedonic Home Value Index.
Tim Lawless, research director for property analyst firm Rpdata, said it was the start of a change in market conditions and there had been a wide range of indicators that a slowdown was on the cards, including lower auction clearance rates, weaker home loan approvals and lower consumer confidence. This was compounded by six recent interest rate rises and large gains across the market since the beginning of last year.
‘Despite a fundamental undersupply of housing, in the short-term at least it looks as if the rate of value growth is sliding. It has simply become more difficult for buyers, particularly those more price sensitive buyers, to both obtain finance and service their debt,’ said his colleague Cameron Kusher.
Rismark’s chief executive Christopher Joye said the figures confirmed the country was not facing a housing boom. The change in the cost of Australian housing was being driven by demand and supply-side fundamentals, not higher debt,’ he said.
Analysts expect prices to start fall in Sydney as they are too high. The average house in Sydney is more expensive than the average home in London and New York, according to a comparison of real estate prices in the biggest cities around the world.
Residex figures show the median cost of a Sydney house is $651,500, almost $190,000 ahead of London, where the median price for a two to three bedroom house is $462,000. A two-bedroom, free-standing house in the New York City metropolitan area (not including Manhattan) is about $180,000 less.
‘It’s quite incredible that houses are cheaper in those cities than in Sydney. But it’s caused by the demand for Sydney houses, which keeps outpacing the supply and that’s not going to change any time soon,’ said Residex head of research John Lindeman.