Whether the October decline is a blip on the path to a recovering market, or a sign of further weakness is yet to be seen
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Sydney, Australia (PRWEB) May 30, 2013
RP Data, Australia's leading property analyst firm, has reported a decline in property values across the country, with the aggregate index from eight capital cities falling by 1%, interrupting a four-month run of recovery. All of the capital cities, with the exception of Perth and Darwin, have experienced a dip in property values.
Earlier in May, the Reserve Bank slashed cash rates by 50 points, plunging property value throughout Australia to its lowest rates this year. This was followed by a steady rebound in the following four-month period, losing steam this October.
Adelaide suffered the biggest decline in house value as it posted a 2.4% fall. Melbourne dwelling values fell by 1.1% while both Sydney and Brisbane fell by 0.9%.
From a quarterly basis perspective, most of the capital cities have posted significant gains with Darwin posting an increase of 1.5%. Adelaide follows with an increase of 1.3%, while Perth and Sydney each increased dwelling values by 0.7%. In contrast, the markets in Hobart and Canberra tumbled by 5.7% and 0.8% respectively.
On an annual basis, Darwin has posted the most significant growth, posting a massive increase of 8.6%. Perth and Sydney follow suit, gaining 3.5% and 0.6% increases respectively. The biggest loser is Hobart which saw a 4.6% decline in property value.
RP Data Research Director Tim Lawless explained that the sudden turnaround of the property market after its four month recovery is an indicator of the fragile state of the Australian housing market.
"Whether the October decline is a blip on the path to a recovering market, or a sign of further weakness is yet to be seen. Other indicators are suggesting the market has gathered some strength, with auction clearance rates holding firm around the 60% mark across the two major auction markets and owner occupier housing finance numbers showing steady improvements since February 2012, albeit from a very low base," Lawless explained.
He acknowledged that consumer confidence remains low despite a 25 basis point increase in cash rates following emergency lows in 2009.
"We have yet to see a real improvement in consumer confidence or housing market transaction volumes. Until we see optimists outnumber pessimists in consumer confidence surveys, a recovery in the housing market is likely to remain precarious," Lawless concluded.