property prices falling %10 year to date.

House price fall a record
September 2, 2004

A RECORD quarterly decline in house prices and a fall in the number of building approvals for the third consecutive month support signs of a cooling housing market, latest figures show.

Approvals slipped 0.7 per cent to 14,438 units in July, compared with a downwardly revised 0.4 per cent fall in June, from an originally reported rise of 1.5 per cent, the Australian Bureau of Statistics said.

In the year to July, building approvals fell 5.1 per cent.

The market median forecast was for a 2 per cent fall, reflecting other indicators show the housing market easing despite surprising resilience in the past three months, economist said.

Meanwhile, the house price prices fell 1.2 per cent in the June quarter for a 10.9 per cent decline in the year to June .

This follows a resurgence of new home sales, which were up 17 per cent in June and July.

“Once again, building approvals continue to hold at a reasonably high level, although today’s result is the third consecutive decline,” UBS chief economist Scott Haslem said.

Mr Haslem said the drop in June quarter house prices had been driven by a 5.4 per cent fall in Sydney house prices and a 3.3 per cent fall in Canberra house prices.

There was quarterly rises in all all other capital cities, ranging from 1.0 per cent in Melbourne to 4.2 per cent in Hobart.

“All up, today’s data continues the ever so modest downward trend in building approvals, with units up and houses down, despite the more significant downtrend in lending for new construction.”

He said the building approvals data was consistent with a sustained relatively high level of activity in residential construction for at least the rest of this year.

“On house prices, the 1.2 per cent fall in the second quarter is a record, but that’s in nominal terms. In real terms, house prices fell much more significantly than this during the early 1990s,” he said

RBC Capital Markets senior economist Su-Lin Ong said the key private sector house component fell by 2.8 per cent in the month, with a downward revision to the previous month, to be down almost 13 per cent in year on year terms.”

Private sector house approvals were 12.9 per cent lower over the year.

She said the 1.2 per cent decrease in June quarter house prices was a very modest decline given the strength of this index over the last couple of years.

“Today’s data confirm that the housing sector has turned after the frenetic pace of activity and escalating prices in recent years, especially 2003,” Ms Ong said.

“However, the data also suggest that housing activity and prices are holding at relatively high levels.”

She said housing data and developments remain consistent with a soft landing scenario for housing and the economy as a whole, with “the continuation of reasonable firm domestic demand for some time, especially given the healthy state of the labour market and amount of fiscal stimulus still in the pipeline”.

Ms Ong said yesterday’s national accounts data highlighted the robust pace of demand.

“Election or no election, the RBA probably has time on its side, although risks must be building amid such buoyant demand and labour market tightness. Ultimately monetary policy is about the assessment of risk, and this continues to favour further modest tightening later in the year.

“We remain with our base case scenario of another 25 basis point hike in November/December.”

Analysts note that with the upcoming October 9 election and the current intense focus by both parties on economic policy and interest rates, the Reserve Bank of Australia was likely to stay sidelined during the campaign and be reluctant to add fuel to the political fire by moving interest rates when the board meets next week.

The central bank has held interest rates steady unchanged this year at 5.25 per cent.

Tomorrow’s retail trade was expected to print another strong number in July, as the federal government’s tax cuts and $600 family payment bonus continue to filter through the economy.

The ABS will publish the July retail sales figures on Friday.

what do you mean yorker??????
So you have just got into the housing sector????? Look, the way i see it, things will be getting a lot worse b4 it gets better. Wait untill the election is over and interest rates start moving north, it will really hit the fan then. the smart ppl have sold they properties now and cash will be king. If you guys cant see that then you will be in hard times in the next 3 years. the australian market is way over priced, just look at how many ppl are posting about properties in NZ, what does that tell you.
i just wish you all luck and be very careful.