‘Modest easing’ recorded in house prices
Anyone planning a property investment in Australia’s major cities may be buoyed by news that all eight capital cities showed modest easing in house prices.
The news was warmly welcomed by Harley Dale, chief economist at the Housing Industry Association (HIA), who asserted that this could be a start towards “an improved environment for 2012” when it comes to property.
New figures from the Australian Bureau of Statistics (ABS) reveal that established house prices fell by an average of one per cent in the final quarter of 2011 – resulting in a figure 4.8 per cent lower than that recorded during the same period the previous year.
Dr Dale noted: “The ABS existing house price series reveals annual declines in established house prices for all eight capital cities, and quarterly declines with the exceptions of Perth, Hobart, and Canberra.”
Affordability will be boosted even further with the announcement of a further rate cut when the Reserve Bank of Australia’s monetary policy committee meets next week (February 7) to make a decision on the cash rate.
Consecutive cuts of 25 basis points each in November and December were applauded by property groups across Australia – although many have asserted that more needs to be done in the new year.
Last week, HIA senior economist Andrew Harvey asserted “there should be no question as to a rate cut in February” – adding that this also needs to be passed on by Australia’s major lenders to pass on any reductions in full.
Harvey added that the monetary policy committee is likely to determine that a rate cut is “the only prudent course of action” in light of global uncertainty, particularly regarding the European economy.
A flat headline inflation result for the consumer price index in the December quarter means that there is enough space to make a reduction to the official cash rates, said Harvey, concluding that this should be accompanied by government stimulus measures to support the Australian property market.