Melbourne's housing price softness to remain in 2012: RP Data

Melbourne and Brisbane have assumed the “mantelpiece” of Australia’s poorest-performing capital city housing markets, according to RP Data senior research analyst Cameron Kusher.

The December Rismark-RP Data Hedonic house price index shows that Melbourne dwelling values are down 6.1% for the year and the same amount from their end of 2010 peak, while Brisbane values are down 6.8% for the year and 8.7% from their end of 2007 peak.

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Kusher says both markets are now undergoing corrections after extended periods of capital growth.

“Melbourne had a very good run between 2007 and the middle of this year,” Kusher told the Australian Financial Review.

“We are seeing values in Melbourne declining fairly quickly. We expect the market to remain soft over the next 12 months, if not longer.”

Kusher says while the rate of decline in Brisbane has slowed somewhat, “dwelling values have not done much since the end of 2007, when values increased that year by about 35%”.

“Much like Perth did, Brisbane is undergoing a correction,” Kusher says.

Sydney was the strongest housing market in 2011, with values down just 0.3%, and Kusher tips Sydney to continue to be the best-performing market in 2012.

“[In Sydney] there are still problems with getting new supply out of the ground. There is still strong demand, even though population growth has slowed across the board – a lot of people are still moving to Sydney,” Kusher says.

According to Kusher, Perth has undergone something of a turnaround in the last quarter of 2011 and is now no longer performing worse than the Brisbane, as it has during the last four years.

Kusher also provided some insights into the oft-neglected Adelaide market, which saw a 0.1% drop in dwelling values in December and a moderate 2011 decline of 4.4%.

“The Adelaide market is fairly flat… The market tracks fairly closely what is going on in other capital city markets,” he says.

Taking a look at the market as a whole, Kusher says there is unlikely to be much property value growth over 2012.

“There may be some slight growth if we get further interest rate cuts but any growth will be below the rate of inflation,” he says.

“A market like Sydney will continue to plod along quite well comparatively speaking and later in 2012 we will start to see some improvement in the Brisbane market.

“[Overall] the performance of the housing market in 2012 will be slightly superior than 2011.”

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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