This article is from the Australian Property Journal archive
THE housing market is cooling. The latest Australian Bureau of Statistics figures show house price growth moderated in the March quarter increasing by 1.1%, following a 4.1% rise in December.
According to the ABS, house prices are 13.85% higher in the 12 months to March.
House prices rose in four capital cities, 1.0% in Canberra, 2.1% in Adelaide, 2.8% in Brisbane and 4.1% in Melbourne. Elsewhere prices fell, 1.3% in Darwin, 1.5% in Sydney, 0.7% in Hobart and 0.6% in Perth.
BT Financial Group’s chief economist Chris Caton said the moderate increase in house prices is further evidence that the rate rises have begun to bite.
“There is nothing here to change the call, the Reserve Bank will sit pat, and is likely to continue to do so as long as the ‘real’ data suggest that the economy is softening to less than trend growth.” Caton concluded.
ANZ’s economist Dr Alex Joiner said there is no doubt that the housing market is cooling, in early 2008 and anecdotal evidence, lower auction clearance rates have and seasonally low activity in the March quarter have now been reflected in slower aggregate national price growth.
“This slowdown is welcome after what had been frenetic activity in most state capitals in the second half of 2007 which saw price growth accelerate rapidly and affordability deteriorate to levels not seen since the late 1980’s.
“Inevitably, high interest rates have tempered price growth but going forward we do not expect any sustained falls in aggregate prices unless we see a significant rise in unemployment leading to forced sales. With the economy expected to remain solid this is in not expected to eventuate.” Joiner said.
Over the 12 months, Melbourne recorded the highest increase, up 25.9%, followed by 21.6% in Adelaide, 20.8% in Brisbane, 14.4% in Canberra, 8.2% in Hobart, 7.1% in Sydney, 4.9% in Darwin and 0.6% in Perth.
ABS data also shows project home prices rose by 1.8% to show a year-to rate of 5.5%. Prices rose in all capital cities, with the largest increase in Adelaide, up by 2.5%. In the past year, the range of price increases for project homes is from 2.8% in Perth to a rise of 8.3% in Brisbane.
JPMorgan’s economist Helen Kevans forecasts house prices will continue to rise in 2008, up 6%.
Kevans said rising residential rents mainly because of an acute shortage of new homes and accelerating population growth will keep upside pressure on house prices in 2008.
“Prospective home buyers still face considerable headwinds. Not only are we forecasting that house prices will continue to rise in 2008 (+6%), but the RBA has already raised the cash rate 50bp this year, so housing affordability, already at record lows, is likely to worsen.” she concluded.
Australian Property Journal
