Since bottoming out in May 2012 residential real estate prices in Australia have bounced back, increasing by 1.2% last month, and the latest index from RP Data shows. It takes the annual movement in dwelling values back into the black with a 1.8% increase over the past 12 months and negating the 1.2% drop in values recorded over the final quarter of 2012.
Brisbane saw prices rise by 2%, Sydney was up 1.8% and Perth 1.7% although prices were more subdued in Melbourne and Adelaide, rising by 0.2% and 0.4% respectively. ‘These strong January results are likely to have seen some upwards seasonal bias, however the housing market has been on a clear recovery trend since June last year. Capital gains aren’t likely to remain this high over the coming months, however we are likely to see the recovery trend continue through 2013,’ said RP Data’s research director, Tim Lawless.
He pointed out that despite the improving market conditions in January, dwelling values across the combined capital cities remain 4.6% below their 2010 peak. ‘The latest housing market data adds weight to the argument that interest rates may be at the bottom of the cycle. The Reserve Bank will be watching the performance of the housing market closely, and the positive trend in housing values will dampen calls for further interest rate cuts,’ Lawless explained. Other data also suggests an improvement in the Australia housing market with the average number of days it takes to sell a property steadily decreasing and sellers discounting less.
According to Lawless, these metrics are a sign that vendors are gradually regaining some leverage in the market. ‘The typical capital city house took 55 days to sell in December 2012, a vast improvement from the recent high of 76 days recorded in February last year. Vendors are now discounting their initial asking prices by an average of 6.6% compared with 7.3% a year ago,’ he said.
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‘With stock levels remaining high, it is likely to remain a buyers’ market for some time, however I think we are now seeing some balance return to the negotiation table. Buyers are losing some of their negotiation power and homes are selling faster,’ he added.