Australia’s housing market slumps worst in Melbourne but not as bad as expected
Australia’s house price slump has been patchy, with Adelaide recording a gain in values, and Melbourne bringing up the rear as far as house price values are concerned.
Melbourne led the nation in the drop in house prices over the past quarter.
Melbourne property values did the worst in the nation, with house prices sinking 1.7% over the quarter, comparing to a dip of only 0.3% in Sydney.
Melbourne based builder Simonds Homes closed its Queensland office last week, after giving up on throwing money at the Queensland operation for three profit sapping years. How Simonds Homes recovers from this is unclear, like many other builders out there doing it tough.
Nationally, home prices fell 0.8% in the December quarter, following a revised 2.4% drop in the previous three months, according to the Australian Bureau of Statistics.
ANZ economist Alex Joiner, who noted Melbourne’s house prices gained 21% in 2007 and dropped 3% in 2008, said Melbourne’s downturn was understandable.
“It’s not a surprise that the capital cities that have benefited most from the boom are easing a little bit more now,” he said, referring to Western Australia and Queensland.
Home prices in Victoria and NSW did not have commodities money pouring into their markets they way it did in Queensland and WA, so their prices are less volatile.
However, home prices in Melbourne, with its diversified economy are likely to hold up better than in Sydney in the coming months.
Sydney is obviously going to soften quite a bit because it’s more of a financial service sector city, and the toxic debt rom the US is expected to flow through Sydney more than Melbourne, bringing layoffs and profits shrinkage.
So Melbourne is probably going to perform a little bit better than Sydney down the track. And that will transfer through to the property markets as well.’
Australia’s house prices fell less than expected, suggesting government efforts to prop up the industry in the face of the global recession are gaining traction.
For the year, house prices lost 3.3%, down from a 2.8% gain in the September quarter, and analysts expected a 2.4% contraction in the annual number.
Other Capital cities had mixed results with Darwin, Canberra and Adelaide home values in positive territory
Other capital cities saw their prices drop, with Perth losing 0.9% and Hobart giving up 1%. Bucking the trend were Darwin, which gained 1.6%, Canberra with added 0.7% and Adelaide edged up 0.3%.
The Government and the RBA focus on kickstarting the economy including housing construction
The Federal Government, along with the RBA, has focused on kickstarting the economy in recent months as the global recession begins to drag on Australian growth.
Last year the Federal Government announced a $10.4 billion stimulus package, aimed in part at resuscitating the housing industry.
The RBA cut the official cash rate this week by 1 percentage point (100 basis points), taking it to an all-time record low of 3.25% in an effort to keep the economy expanding in the face of global recession.
The house price picture for 2009
THe forecast is for house prices to fall 10% in 2009, faring much better than most other countries. What we have in our favour is migratiion, high birth rates, a housing shortage and a strong financial base line to work from that should see our house prices hold their values better than most other developed countries.