Dwelling prices down 0.2% in December 2011, with Melbourne and Perth hit hardest: RP Data-Rismark

Capital city dwelling prices fell 0.2% in December on a seasonally adjusted basis, with Melbourne dwelling values down 0.5% and Perth values down 1.6%, according to the latest RP Data- Rismark Home Value Index.

The small national drop in dwelling values in December follows an upwardly revised 0.4% rise in dwelling values in November (preliminary data showed a 0.1% increase).

Over the 2011 calendar year, capital city dwelling prices are down 3.6% while regional values are down 2.9%.

For the December 2011 quarter Melbourne dwelling prices were down 1.4% while Perth values were down 2.1%, making the WA capital the weakest capital city market.

There are now two reports suggesting Melbourne dwelling prices are continuing to decline, with one suggesting they are increasing.

Sydney housing has been the nation’s best performer, with dwelling values up 0.4% in December and by 0.7% over the quarter.

Melbourne has the weakest rental market, with gross rental yields of 4% for houses and 4.3% for units.

Darwin is returning property investors the strongest rental yields – 5.6% for houses and 6% for units.

Rismark director Christopher Joye expects the Melbourne and Perth figures to be cast in “a more positive light” when they are revised in February.

According to Joye, preliminary estimates for December and January can be difficult to interpret due to lower sales volumes and tardiness in some city valuer-generals’ offices in transferring transaction information over the holiday season.

“It just so happens that these cities’ valuer-generals are probably the worst offenders when it comes to the timely transmission of data,” Joye says.

“What makes the Melbourne and Perth numbers especially suspect is that they come on the back of solid seasonally adjusted gains in November, which have been reconfirmed with RP Data-Rismark’s latest index analysis.

Previous house price data has sent out mixed messages about where Melbourne house prices may be heading.

Last week, Australian Property Monitors (APM) surprised most pundits by reporting that Melbourne house prices increased 1.1% over the December 2011 quarter to a median of $538,000, the best result for all capital cities and the first quarterly rise since December 2010.

End-of-year figures put out Residex in mid-January show that Melbourne house prices fell sharply in the second half of 2011 to be down 3.28% annually having recorded positive annual growth of 1.58% by mid-2011.

According to Residex, Perth house prices declined by 3.76% for the year, having been down 2.21% for the year six months ago.

Raw RP Data- Rismark  results (not taking into account seasonal factors) show capital city dwelling prices down 1.2% over December with Perth values down 1.9% and Melbourne values down 1.7%.

According to the Austalian Bureau of Statistics (ABS) seasonally adjusted figures provide a more accurate month-on-month comparison.

"Seasonal adjustment allows for and removes the regular, reoccurring influences that could distort the short term view of what is happening," says the ABS.