Wednesday, February 1, 2012

Property market levels out, but city still slipping

AUSTRALIA'S year-long decline in house prices may be levelling out. Capital city home values fell in every quarter last year but the rate of decline was slowing, the latest figures from property analysts RP Data-Rismark show.

In the last three months of 2011, prices fell by 0.5 per cent, a smaller decline than the previous June and September quarters when they dipped 0.8 per cent and substantially less than a 1.5 per cent decline in the March quarter.

Last week, data provider Australian Property Monitors released figures which showed national house prices stayed flat in the December quarter.

At a state level, the figures calculated by each provider using different methods were more contradictory.

According to RP Data, Melbourne's house prices fell 1.4 per cent in the December quarter. But figures from APM and the Real Estate Institute of Victoria show values rising by 1.1 and 1.9 per cent respectively in the same period.

New Reserve Bank figures showed debt-shy households are becoming even more wary of borrowing. Annual growth in housing credit in 2011 was just 5.4 per cent, the slowest yearly growth ever recorded since the data was first tracked in 1976. Year on year, the entire national growth in housing loans was accounted for by a surge in loans to first home buyers in New South Wales. The Australian Bureau of Statistics shows that in the last months of 2011, NSW first home buyers rushed in before the state government axed their $20,000 stamp duty exemptions from January 1.

In the three months from August to November 2011, loans to first home buyers in NSW jumped 77 per cent, while loans to Victorian first home buyers fell 2 per cent. That surge will recede in 2012, casting doubt on forecasts that a recovery is under way.