Almost missed this one. Residex yesterday released its house price index for the month of February. According to Residex, national median house prices rose by 0.42% in the month of February, partly offsetting January’s -1.2% fall. By contrast, unit prices fell by -0.49% in February, which follows January’s -0.62% fall.
Of the major capitals, Perth and Sydney recorded solid house price growth (+2.32% and +1.35% respectively), whereas Adelaide (-1.22%), Brisbane (-1.12%) and Melbourne (-1.02%) recorded falls (see below table and commentary).
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The data shows that our housing markets are still in trouble, however not all markets are falling in value and the position is better than what we have seen on a number of occasions in the last 12 months. Perth and Sydney performed the best in the last month while Melbourne, Adelaide and Brisbane are among the major cities that continue to provide poor outcomes. The annual fall of values in these cities are significant. For Melbourne, we have to go back to 1991 to find an annual fall in value greater than the fall we are currently seeing and it is also provides the lowest rental yield in Australia.
In a separate blog post, Residex CEO, John Edwards, noted the following about the outlook for the Australian housing market:
In the graph ‘Trend: Australian Housing’ I present the position based on capital growth. This graph is indicating that there is more correction to come on an Australia-wide basis and that we are yet to reach the bottom of the corrections phase.
This position is more probably than not confirmed by the fact that the ABS released its finance approvals figures for January, which indicate that housing finance approvals for owner occupied dwellings fell by 1.2 per cent in January. If we were to remove the refinancing that occurred during this period, we would have a total fall in activity of 2.8 per cent, which is larger than the increase we saw in December, 2011 (2.0 per cent).
The encouraging statistics that December growth in finance with respect to investment activity was 7.4 per cent has been negated by the negative adjustment in January of -7.1 per cent. These numbers suggest a very sluggish start for our housing markets in 2012…
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
