MAKING NEWS

Wed, 01 September 2010
Home prices stabilise after surprise fall By online business reporter Michael Janda
Australian home prices have stabilised in July, after falling for the first time in 17 months in June.

The widely watched RP Data - Rismark Hedonic Home Value Index for capital cities climbed a seasonally adjusted 0.4 per cent in July, after sliding 1 per cent in June.

However, the modest growth in July still leaves the index 0.3 per cent lower than it was three months ago.

It has also slowed the annual growth in home prices in the capital cities to 9.7 per cent.

RP Data's research director Tim Lawless says he is not surprised by the result.

"In the period between end 2008 and March 2010, Australian home values rose by 16.3 per cent. Yet monthly growth rates have declined consistently since the start of the year," he noted in the report.

"RP Data and Rismark expect to see the market track sideways over the second half of the year."

Prices in regional and rural areas have been even more subdued than those in cities, with 'rest of state' house prices flat in July, down 0.2 per cent over the three months to July, and up only 4.7 per cent over the 12 months to July.

Among the capitals, Darwin recorded the strongest growth of 1.1 per cent over the three months to July, while Perth and Brisbane had the biggest falls of 2.5 per cent.

Sydney's property market edged higher with a 0.3 per cent rise in dwelling prices, while Melbourne prices continued to ease after their recent surge peaked, falling 1.1 per cent in the three months to July.

However, Rismark's chief executive Christopher Joye says it is unlikely that there will be big falls in house prices ahead, because of the significant undersupply of new houses.

"House prices track very closely to disposable household incomes," he told ABC News.

"We're expecting about 5 per cent growth in household incomes this year, we've had around 4.2 per cent growth in national house prices, so we don't expect much more growth for the remainder of the year."

The RP Data - Rismark hedonic index takes account of factors such as the location of properties, number of bedrooms and bathrooms and land area, to adjust for changes in the composition of the housing market in any one month.

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