31 January 2012

RP Data – Rismark Home Value Index Release

The  preliminary capital city dwelling value index result for December was -0.2% (s.a.)  following an upwardly revised 0.4% rise in dwelling values in November (was  0.1%). Revised regional house values for November increased from 0.3% to  0.5%. Sydney housing has been the nation’s best performer with dwelling values  up 0.4% in December and by 0.7% over the quarter (s.a.).

In the generally  seasonally weak month of December, the preliminary RP Data-Rismark Home Value Index  result for capital city dwelling values was -0.2 per cent (s.a.). Low sales volumes  in December mean that this number will likely see a more significant revision  than normal.

The November result  from the RP Data-Rismark index for dwellings  in capital cities has revised up from 0.1 per cent (s.a.) to 0.4 per cent (s.a.) based on  additional sales information. This marks the largest month-on-month improvement  in Australian home values since May 2010.

The RP Data-Rismark ‘rest-of-state’  index, which covers Australia’s regional markets, has also revised up in  November from 0.3 per cent to 0.5 per cent (s.a.).  This is the most significant increase in regional house values since November  2010.

Over the December  quarter, Australia’s capital city home values declined by -0.5 per cent (s.a.).

RP Data’s director of  research Tim Lawless, said, “The December quarter was the year’s smallest  quarterly decline. According to our index, capital city home values fell by  -1.5 per cent (s.a.) in the March  quarter, and by a further -0.8 per cent (s.a.)  in each of the June and September quarters. This rate of decline had  decelerated to -0.5% by the final quarter of 2011.”

In 2011, Australian  capital city dwelling values experienced a capital loss of about three and a  half per cent. Regional  house values fared a little better, correcting by around three per cent. This compared to the  14-15 per cent decline in Australian shares. Adding in rents, the gross total  return to Australian property investors was slightly less than one per cent  over 2011.

Rismark’s managing director  Ben Skilbeck said, “The month of  December is characterised by a significant lull in activity and the preliminary  index results have likely been influenced by some more volatile Melbourne and  Perth estimates. We expect to get better clarity on the monthly movements as  more information is reported.”

“Sydney currently has  the largest volume of reported sales in December. In seasonally-adjusted terms,  Sydney dwelling values rose by 0.4 per cent in the month of December. In the  December quarter, Sydney dwelling values are up a total of 0.7 per cent (s.a.)” Mr Skilbeck said.

RP Data’s Tim Lawless  observed that rental markets continued to strengthen in December.

“Weekly rents across  the capital cities were up 1.0 per cent over the December quarter and are now  6.3 per cent higher than at the same time last year.”

“These higher rental  rates combined with online casino the slide in property values have improved investors’  yields. The average capital city dwelling is now offering a gross rental return  of 4.6 per cent after a consistent trend upwards since mid-2010 when the typical  capital city dwelling was yielding just 4.1 per cent. Darwin and Canberra are  the highest yielding locations for property investors while Hobart, Brisbane,  and Sydney provide gross yields that are better than average,” Mr Lawless said.

On the outlook for  the year ahead, Rismark’s Ben Skilbeck commented, “We  expect that the RBA’s interest rate cuts in the final two months of 2011 will  lend further momentum to housing activity as transaction volumes pick up over  February and March after the seasonally slow months of December and January. If  financial market pricing for substantial additional RBA rate cuts proves  accurate, we could see a stronger-than-expected bounce-back in housing  conditions.”

“Housing  affordability in Australia has experienced a striking improvement in recent  times. While disposable household incomes on a per household basis rose by five  per cent over the year to September 2011, Australian dwelling values have  declined by 3.4 per cent since September 2010. As a result of the RBA’s rate  cuts borrowers can now get fixed- and variable-rate home loans as low as 5.9  per cent and 6.14 per cent. Rismark’s research shows that  disposable incomes per household have risen about 15 per cent further than  Australian dwelling values since the end of 2003. This helps account for the  decline in Rismark’s national dwelling  price-to-income ratio, which is as low as its been since 2003” Mr Skilbeck said.

RP Data’s Tim Lawless  added, “While global uncertainty and a stagnant local labour market could weigh  on the consumer’s mindset, we are nevertheless observing improvements in  monthly housing finance commitments. RP Data’s leading indicators on average selling  times and vendor discounts are also starting to look healthier. There is no  doubt that additional interest rate relief in 2012 would afford a very welcome  cushion to the housing market.”

Source: RPData

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