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Market Update:
6th August 2010
Here's a quick summary of three items that were in the news this week that impact property investors.
Quick Summary:
Median House Price Update
Two series of median house price data were released: June Monthly from RP Data / Rismark and the June Quarterly from the ABS.
| City | June 2010 Qtr (Latest Released) |
Change To Previous Month |
Change To Previous Qtr |
Yields On Houses
|
Comment |
|---|---|---|---|---|---|
| Sydney | $589,000 |
-0.1% |
+0.5% |
4.2% |
Back below $600k. |
| Melbourne | $500,000 |
-1.4% |
+0.4% |
3.5% |
The good times couldn't last |
| Brisbane | $470,000 |
-0.8% |
-1.9% |
4.1% |
Underperforming... again. |
| Perth | $495,000 |
-1.5% |
-2.8% |
3.9% |
Remains flat |
| Adelaide | $409,000 |
-0.7% |
+0.9% |
3.9% |
Comparatively low yields |
| Canberra | $549,950 |
-1.4% |
-0.6%
|
4.6% |
Weakness emerging |
| Hobart | $338,500 |
N/A |
N/A |
4.9% |
Cheap but not nasty! |
| Darwin | $538,250 |
-1.0% |
0.3% |
5.2% |
Price down but best yields |
| Australia | $495,000 |
-0.8% |
-0.3% |
4.0% |
Declining growth |
Source: RP Data / Rismark
The RP Data / Rismark series showed weak / negative growth over the month and flat growth over the quarter - the first decline in 17 months. This is certainly consistent with what I'm seeing and hearing around Australia.
The ABS data was more bullish in terms of higher prices, however, it too showed that the pace of growth was slowing.
In summary, the property market has cooled significantly over the first six months of this year, and, unless there is some generous porkbarrelling by the political parties (i.e. grants / stimulus ideas), it's likely there will be only small amounts of growth in real estate prices for the remainder of 2010.
Interest Rates
On the back of lower than expected inflation numbers, the RBA decided not to increase their cash benchmark rate, instead leaving it unchanged at 4.5%.
I must say, I was feeling a little silly there for a while, because, after writing on the 8th of July that I was becoming 'neutral' towards interest rate rises, I immediately read that most economists were expecting an increase. Doh! So much for sticking your neck out! Luckily there was a happy ending... maybe my increasingly shiny head is becoming more like a crystal ball?!?
Anyway, after the release of the weaker inflation and retail spending data, I think we're all now singing from the same economic song book and the consensus is we are unlikely to get another rate increase this year. In fact, the question I'm wondering now is... will the next movement be down? Time will tell.
Building Approvals
The ABS reported that building approvals fell by 3.3% in the three months to the end of June, continuing a trend that began in September last year.
Although this seems like bad news, the truth is that there were still more approvals than this time last year. That said, I believe the decline is in line with the general malaise affecting the property market and indicates that a return to strong growth is some months off.
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