Residential property prices in Australian cities are climbing again after the country’s central bank cut interest rates with values rising 1.4% in September.
It is the biggest monthly rise in prices in 30 months and they are also rising on a quarterly basis, up2% in the third quarter of the year, the latest figures from the RP Data-rismark Home Value Index shows.
Prices increased the most in Adelaide and Perth, up by 2.4% and 1.6% respectively. Darwin and Canberra posted the biggest declines, falling 2% and 0.6%.
It means that prices across the eight cities covered by the index will climb as much as 3% in 2012 and between 4% and 7% next year, experts predict.
‘It’s no coincidence that housing market conditions bottomed out at the end of May, after the Reserve Bank cut the official cash rate by 50 basis points,’ said Tim Lawless, research director at RP Data.
‘A further cut of 25 basis points in June and the anticipation of further rate cuts in the pipeline appear to have instilled renewed confidence in the housing market,’ he explained.
A third consecutive fall in new home sales in September highlights the persistent lack of confidence towards housing in 2012, said the Housing Industry Association, the voice of Australia’s residential building industry.
Meanwhile, sales in the country’s new home market are continuing to fall. The latest New Home Sales report from the Housing Industry Association which covers Australia’s largest volume builders, showed a decline of 3.7% in September 2012.
There was a fall of 3.5% in the persistently weak detached housing market and a 4.2% decline in the multi unit market, suggesting that lower interest rates are not boosting the new homes market.
The number of seasonally adjusted new detached house sales fell by 1.6% in New South Wales, by 6.7% in Victoria, and by 3.5% in Queensland. Detached house sales increased by 2.8% in South Australia and were up by 3.1% in Western Australia.
‘The persistent weakness in new home sales in 2012, driven by the detached house market, primarily reflects another factor conspicuous in its persistence this year, that is a dire lack of confidence towards housing,’ said HIA chief economist Harley Dale.
‘Interest rates have come down since November 2011 and there is a recognition that the home buying environment has improved in 2012. However, households remain reticent to actually make a decision to buy. This situation is especially evident in the new home building sector where excessive taxation instils a bias against new housing relative to existing property,’ he explained.
‘Interest rate cuts should help foster a recovery in new home sales in the December 2012 quarter, along with new home incentives for first time buyers in three states and a nascent recovery gathering legs in Western Australia,’ he added.