RP Data – Rismark Home Value Index Release
Home values across Sydney, Melbourne, Brisbane, Perth, Hobart and Canberra all rose by 1% or more in June helped along by RBA interest rate cuts over May and June. Melbourne dwelling values have staged a striking 1.7 per cent recovery since reaching a trough on 11 June.
The daily RP Data-Rismark Home Value Index recorded a weighted-average 1.0 per cent increase over the month of June with broad-based capital gains evidenced across most of the capital cities. The rise in dwelling values has partially reversed the -1.4 per cent fall recorded in May.
RP Data research director Tim Lawless said, “The catalyst for the improvement in market conditions is likely to have been the 55 basis point reduction in the average discounted home loan rate over May and June as well as the subtle improvement in consumer sentiment readings that have been reported.”
In what is usually a seasonally-weak month, actual dwelling values rose in Sydney (1.0%), Melbourne (1.0%), Brisbane (1.0%), Perth (2.0%), Canberra (2.0%), and Hobart (2.7%).
While there were signs of weakness in Darwin (-0.7%) and Adelaide (-1.1%), RP Data-Rismark’s daily index shows that dwelling values in both these cities started flat-lining or rising again over the second half of June.
Rismark CEO Ben Skilbeck, added, “Perhaps the most significant insight from our daily index is the rebound in the Melbourne housing market. Between January 2009 and December 2010 Melbourne dwelling values rose by a remarkable 35 per cent. Since that time they have corrected by just over 8 per cent. After reaching a trough on 11 June, Melbourne dwelling values have now recovered by an impressive 1.7 per cent. But they are still off about 4.1 per cent in 2012.”
According to RP Data’s director of research Tim Lawless, the healthy capital gain in June comes as no surprise. “The RP Data-Rismark daily index across the eight major capitals has been consistently rising over the month, foreshadowing this positive month-on-month result. The increase in capital city dwelling values is an encouraging sign that the market appears to be responding to improved housing affordability and lower interest rates.”
Despite the positive month-on-month result for June, Mr Lawless noted that Australian home values are still down somewhat over 2012. “So far this year capital city dwelling values have simultaneously risen over three months and fallen over three months. The wash up is that values have fallen more than they have risen, with the market down by -1.2 per cent over the first six months of 2012. Regardless, while discounted variable mortgage rates are as low as 5.6 per cent, Australian households remain understandably cautious about the economy given the global uncertainty. This is likely to weigh down on consumer demand for high commitment purchases.”
Rismark International’s CEO Ben Skilbeck, commented, “The rebound in capital city home values during June indicates that the RBA’s relaxed monetary policy stance may have reached the point of inflating asset prices despite households remaining cautious about the economy.”
“The housing market’s fundamentals are increasingly solid: Rismark’s dwelling price-to-income ratio is at its lowest level since March 2003, while the RBA’s Guy Debelle said last week that default rates are low and there is no evidence of overbuilding. If interest rates continue to be pushed lower, as they have been since November-with total cash rate cuts of 1.25 percentage points-then asset prices will inevitably respond to this stimulus. The fact is that mortgage rates are well below their long-term averages, with 3 year fixed-rates as low as 5.75 per cent”, Mr Skilbeck said.
source: RP Data