RP Data – Rismark Home Value Index Release
Australia’s housing market is showing signs of stabilising after home values rose 0.2 per cent in March. Not only has the market remained unchanged for the quarter ending 31 March 2012, it is also level with the 31 November 2011 home values across the combined capital cities. The flat result over the quarter is the strongest result since March 2011 when values increased by 0.7 per cent.
RP Data’s research director, Tim Lawless points out that while the quarterly result was an improvement on recent quarters, the Sydney housing market has been the primary growth driver.
“Looking at the quarterly results on a more granular basis, the improved conditions over the March quarter can largely be attributed to the performance of Australia’s largest housing market, Sydney, where values rose 1.1 per cent over the quarter. Values were down across many of the other capital cities over the quarter with the most significant drop recorded in Adelaide where dwelling values were down 1.5 per cent,” Mr Lawless said.
According to the managing director of Rismark International, Ben Skilbeck, “While the housing market remains soft, the zero per cent change over the first quarter of 2012 demonstrates that it is consolidating its position following the decline seen in calendar year 2011. This month it was the resource rich states which delivered the strongest gains with Perth, Darwin and Brisbane up 1.4 per cent, 1.1 per cent and 0.8 per cent respectively”.
Over the twelve months ending March 31, capital city home values are down 4.4 per cent with the largest falls being recorded in Hobart (-7.3 per cent), Brisbane (-6.1 per cent), Adelaide (-5.7 per cent) and Melbourne (-5.4 per cent). Despite the fall in Melbourne home values they are still up 45.5 per cent since the start of 2007. At the other end of the spectrum, Canberra continues to show the most resilience with values down just -0.3 per cent over the year.
According to Mr Skilbeck there are a number of factors pointing towards an improvement in housing market conditions over recent months.
“The ratio of national house prices to household disposable incomes is currently below the decade average. Additionally, according to the ABS housing finance data, both the value and number of loan approvals for the purchase of established dwelling are at levels not seen since November 2009. First home buyers as a proportion of all home loans approved are back to levels not seen for 2 years,” Mr Skilbeck said.
Yields are also showing modest improvements. According to Mr Skilbeck, “rental yields for houses across the combined capital cities have moved from just 3.6 per cent eighteen months ago to 4.1 per cent and gross yields on unit dwellings have improved from a recent low of 4.4 per cent to 4.8 per cent. The most significant rental yield improvements have been recorded in Darwin, Perth and Brisbane where yields have increased by 22 per cent, 21 per cent and 18 per cent respectively from their recent lows.”
Other market metrics are also showing some improvement. “The number of properties available for sale is continuing to moderate from the historic highs which peaked late last year and auction clearance rates have been holding above 50 per cent for most of 2012,” Mr Lawless said.
“Additionally, we have recently seen the Reserve Bank reporting that the rate of mortgage arrears has fallen from a peak of 0.7 per cent to 0.6 per cent, a default rate which is comparably low by international standards. The latest Financial Stability Review from the RBA also highlighted that most mortgage holders are paying down more of their mortgage debt than they are contractually obliged to, a sure sign that Australian’s are coping with their mortgage debt,” Mr Lawless said.