Dwelling values record first month-on-month fall since May 2013

For the first time in 12 months, dwelling values across Australia’s capital cities showed a monthly fall, dropping 1.9 per cent in May according to the latest RP-Data Rismark Home Value Index.

Across most of the individual capital cities, dwelling values were also down over the month, led by Melbourne with a -3.6 per cent reduction in values. Over the past three months capital city dwelling values were up 0.7 per cent, the lowest rolling quarterly rate of dwelling value appreciation since the three months ending June 2013.

Over the growth cycle to date, which commenced in June 2012, capital city dwelling values are up 13.9 per cent. According to Mr Lawless, the surge in values has largely been driven by strong market conditions in Sydney (+21.1 per cent).

“The month-on-month fall in capital city dwelling values is likely due in part to seasonal phenomenon, but may also be indicative of a broader trend towards cooler housing market conditions.

“Historically, housing market conditions have softened in April and May as the market rebalances from what is typically a seasonally strong first quarter and also as a result of cooler climatic conditions during the autumn and winter months. Outside of this seasonality, we have been seeing signs that the housing market is at or approaching the peak of the growth cycle.

“The rolling quarterly rate of growth peaked in August last year and we have been seeing weaker auction clearance rates since late February when the capital city clearance rate hit 76 per cent,” Mr Lawless said.

A recent deterioration in consumer confidence reported in the Westpac/Melbourne Institute Consumer Sentiment Index shows that this factor may also be playing a role in the winding down of housing market conditions. According to the Index, consumer sentiment peaked in September last year and has since declined by 16.0 per cent. The May consumer sentiment results showed a significant fall away which can be attributed to the announcements made in the recent Federal Government Budget.

“There is a very strong correlation between levels of consumer confidence and housing market activity. If we see sentiment levels remaining low it is likely that housing market activity will be more sedate,” Mr Lawless concluded.

Across the broader price segments of the capital city housing markets, the premium markets have attracted the highest capital gain over the past twelve months with values across the most expensive quarter up 10.9 per cent compared with a 10.8 per cent lift in values across the broad middle fifty per cent of the market, and a 9.1 per cent gain at the most affordable quarter of the market.

Posted by Charles Tarbey on 18/06/2014 at 12:00 AM | Categories:

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