The housing market is going through a cyclical deceleration rather than facing a `bursting of the bubble’, the Real Estate Institute of Australia (REIA) said this week.
Announcing the release of the report Real Estate Market Facts for the March quarter 2011, REIA President David Airey said the housing market was slowing slightly due to cyclical changes, with the weighted average capital city median price for the Australian residential property market decreasing over the March quarter of 2011.
“Both house and other dwelling median prices decreased by 2.5 per cent to $532,695 and 1.8 per cent to $422,947 respectively,” Mr Airey said.“This represents a deceleration in property prices after a period of solid growth in previous quarters.
“We are witnessing the impact on prices of increases in cash rates during the second half of last year, rises in the cost of living have restrained household spending and the natural disasters in Queensland have also significantly affected the property market,” he continued.
With the exception of Sydney and Adelaide, all Australian capital cities recorded median house price decreases over the quarter. Sydney, Melbourne and Darwin recorded the highest median house prices, while the lowest were recorded in Hobart, Adelaide and Brisbane.
“Melbourne house prices recorded the largest drop over the quarter, down 6.0 per cent to $565,000. The largest increase in median prices was evident in Sydney, up 1.1 per cent to $637,258,” he said. Rents for three bedroom houses showed varied results in the March quarter, with Melbourne, Adelaide, Perth and Hobart reporting increases, Darwin reporting a decline, and Sydney, Brisbane and Canberra reporting no changes.
Over the year, all capital cities recorded increases with the exception of Brisbane, where rents remained unchanged.
The decrease in property prices was accompanied by a decline in the value of owner occupation and investment loans, which declined 17.6 per cent and 18.2 per cent during the March quarter; these are one of the largest quarterly declines observed since the September 2002 quarter.
“In summary, we are seeing a softening of the housing market explained by economic factors, not a bubble starting to burst,” Mr Airey concluded.
Source: Quartile Research www.quartileresearch.com.au