House prices falling across Australian capital cities

House prices falling across Australian capital cities
Date of Publication: Friday, 01 June 2012 16:06

House prices are falling to record lows across Australian capital cities, with credit ratings agencies ready to further downgrade mortgage insurers.


Across all capital cities, prices fell 1.4%, which leaves them 5% down on one year ago. Adelaide proved the only regional capital to buck the trend, by sporting a 1.2% rise in prices. Hobart, Canberra, Darwin, Brisbane, Sydney and Melbourne all reported house price falls.


Melbourne was the worst affected – at 2.7% down – which leaves prices 8% down over the year.


This is despite the Reserve Bank of Australia having cut central interest rates by one percentage point since November in an attempt to stimulate the economy.


Tim Lawless, research director of RP Data, which performed the research, described the market as "increasingly price-point driven", stressing that the market would perform better where prices were more affordable.


The greater supply of available housing on the market is also driving down prices, as the number of homes advertised for sale had risen by 9% on last May, according to RP Data estimates.


Despite this fall in performance, however, ratings agency Moody’s believes that the Australian housing market is still vastly overvalued, characterised by "structurally elevated house prices and household debt levels".


It has threatened to cut the credit rating of three leading mortgage debt insurers. QBE Lenders, Westpac Lenders, and Genworth Financial Mortgage Insurance services are all now under review.


Bret Clement

Friday, 01 June 2012 16:06
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