Australia’s housing market continues to tread water, with the latest figures from RP Data and Rismark showing house prices increased just 0.1% in September, meaning house prices have basically not risen since May.
The data shows the national median city house price is $406,500, which is $9500 lower than at the end of the June quarter.
During the month, the best-performed market was Sydney, where prices increased 0.9% during the month, compared to a rise of 0.5% in Melbourne and 0.7% in Brisbane.
Prices in the under-performing Perth market dropped 1.9% in September, while prices in Darwin were down 1.1%, down 0.8% in Adelaide, and down 0.3% in Canberra. Hobart prices were not available.
Rismark managing director Christopher Joye says price are likely to track sideways for the rest of 2010, but warns predictions of further rate rises could put further pressure on prices in the short to medium term.
“Home loan rates will eventually start increasing, with the prospect that the peak mortgage rate could converge to close to 9%, which is more than 1.5% higher than the current average variable mortgage rate of 7.4%.
“Our analysis suggests that a substantial increase in rates would put some downward pressure on dwelling prices. Household balance-sheets will be supported by a strong labour market and robust income growth.
“But let’s be clear: it is now just a matter of time before the RBA and/or the banks raise rates again. New borrowers taking out loans should be prepared to service rates 1.5% higher than what they are currently paying.”
However, lack of price growth does create some opportunities for investors, according to RP Data senior analyst Cameron Kusher.
“Early signs suggest that rental rates are once again improving, listings are at above-average levels, and leading indicators such as time on market and vendor discounting are creeping up,” he says.
“For those active in the market there is increasing scope for price negotiation and less competition among buyers with an above-average number of properties for sale. These conditions are likely to afford opportunities to purchase property at more competitive prices.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
