RPData’s latest newsletter is out and, as expected, is once again fairly bearish. Canberra is bucking the trend on the back of the public sector, everywhere else is struggling in degrees from a little to a whole lot. It must also be noted , because I find most people struggle with the idea, that a % fall is more negative than a corresponding rise of the same % value is positive when the fall occurs after the rise. i.e (100 + 10%) – 10% = 99.
While the headline figures for each capital city are meaningful, drilling below the surface reveals a wide variance in how house values are performing from region to region.
Capital city house values fell by a total of -1.5% over the June 2011 quarter and by -2.8% over the preceding 12 months. The growth in house values has lagged that of units over the past year and over the past five years. While capital city unit values have grown at an average annual rate of 6.2% for the five years to June 2011, house values have grown by a lower 5.2% annually.
The relatively more subdued capital growth performance across the detached house market compared with units is reflective of changing lifestyle patterns as well as likely being reflective of home buyers seeking more affordable alternatives than houses (with units typically cheaper).
Of all the capital cities, house values in Brisbane recorded the largest declines over the 12 months to June, falling by -6.9%. As the accompanying table shows, not one region of Brisbane has recorded positive growth in house values over the past 12 months. The magnitude of value falls has varied from a -0.1% fall in Inner Brisbane to a -13.9% fall in values within Beaudesert Shire Part A which comprises the southern suburbs of the Logan council region.
RPData’s has also released its latest video which once again contains more bearish outlooks.
The first chart Tim Lawless presents ( shown above ) clearly shows that this downturn is gearing up to be far worse than the corresponding downturn during the GFC but as yet we have seen no sign of government intervention.In fact both NSW and Qld have recently adjusted their stamp duty programs to target new builds which will be putting downward pressure on existing housing as they take affect.
Tim does suggest that there maybe some hope for the market just around the corner in a recent blog post. But given current global economic conditions I suspect we will be seeing a lot more of “wait and see” than “buy, buy ,buy ” this spring. It is possible that the lower prices in some capital cities could entice buyers back into the market. However there seems to be an acceleration of price declines in areas that have been performing poorly for longer periods of time. This suggests that these markets are capitulating, although it’s probably too early to make that call. It is therefore possible that spring will actually be far worse than the earlier parts this year as more stock comes onto the market in anticipation of sales that don’t eventuate.