Westpac Bank has just released its latest residential property market update report that gives a good overview of what’s happening in the residential property markets around Australia. Here’s a summary.
BY MICHAEL YARDNEY
What’s happened to property values?
Westpac reported that the Real Estate Institute of Australia’s (REIA) 2010 Residential Market Facts for the first quarter indicates that nationally, average median house prices increased by 0.8 per cent over quarter one 2010, which is lower than the 4.2 per cent quarterly increase reported by Rismark.
On a state basis, REIA suggests quarter one house prices increased in Adelaide (4.5 per cent), Perth (3.1 per cent), Hobart (2.8 per cent), Sydney (1.4 per cent), Darwin (1.3 per cent) and Brisbane (0.9 per cent) while prices fell in Melbourne (minus two per cent) and Canberra (-0.2 per cent).
The REIA indicates that national median house prices are now 18.7 per cent higher than a year ago,
which, according to REIA, is the highest annual increase since September 2003.
Melbourne has recorded the largest annual growth of 29.3 per cent, followed by Hobart (20.8 per cent), Darwin (20.2 per cent), Perth (16.3 per cent), Sydney (14.8 per cent), Brisbane (14 per cent) and Canberra (9.3 per cent).
We know property prices are affected by supply and demand, so let’s look at what Westpac has to say about them…
HOUSES: On a seasonally adjusted basis national dwelling approval numbers for houses have been trending downwards recently, with numbers down by 3.8 per cent on a three-month rolling basis. April was no exception to the trend, recording a monthly fall of 13.5 per cent. Despite the recent decline in numbers, annual approvals for houses in April were 18.9 per cent higher than a year ago.
On a state basis, monthly housing approval growth declined across all states. The largest declines were recorded in Victoria (-23.8 per cent) and South Australia (-15.3 per cent). The remaining states saw declines of between -2.5 per cent (Western Australia) and -9.4 per cent (New South Wales).
APARTMENTS etc.: After increasing by a huge 58.3 per cent in March, national approval levels in April recorded a minor correction, falling by 5.4 per cent. Despite the monthly fall, approvals for other dwellings have increased by 13 per cent on a three-month rolling basis although annual levels still remain slightly lower than a year ago, by -0.5 per cent.
On a state basis, approval numbers for other dwellings were mixed in April. Queensland and Victoria recorded growth of 7.7 per cent and 2.8 per cent respectively, while falls were recorded in WA (-47.6 per cent), NSW (-27.9 per cent) and SA (-11. per cent).
On a seasonally adjusted basis the number of finance commitments to construct or buy new dwellings declined for the sixth consecutive month in April, falling by 1.8 per cent, although remain 7.5 per cent above the long-term average. Annual commitment numbers for new dwellings are 38.6 per cent higher than a year ago.
Finance commitments also remained weak for existing dwellings, as numbers fell for the seventh consecutive month, by 0.1 per cent. Despite the weakness for much of the past six months, annual commitment numbers for existing dwellings are 7.7 per cent higher than a year ago.
National price adjusted investor finance levels continue to gain momentum, increasing by 1.2 per cent in April, after growth of 7.7 per cent in March. Investor finance levels are currently some 31 per cent higher than long-term average levels. On a three-month rolling basis, Victoria has recorded the largest growth of investors, by 16.9 per cent, followed by NSW (13.5 per cent), Queensland (13.5 per cent), SA (13 per cent) and WA (10.3 per cent).
There are lots of numbers and facts, but in summary our property markets have performed well over the past year but there are now a number of indicators that the markets are slowing and will remain more subdued in the months ahead.
In particular finance approvals, which are a leading indicator, keep falling, suggesting there will be fewer owner-occupiers in the market over the next few months. On the other hand investors are back in the market, and they’ll take up some of the slack.
Source for much of the information: Westpac Property Monitor June 2010
Michael Yardney is the director of Metropole Property Investment Strategists, a best-selling author and one of Australia’s leading experts in wealth creation through property. Subscribe to his e-magazine at www.propertyupdate.com.au. For more information about Michael visit www.metropole.com.au.