City prices stay firm in May quarter

Posted on 5/07/2011  

House prices (the average in the eight capital cities) remained fairly constant over the May quarter. Australian Property Monitors figure recorded a small rise of about $400 (just 0.1%) in the median house price, which effectively means no change.

Sydney, Melbourne, Canberra and Hobart all recorded small rises (between 0.8% and 1.8%) in the May quarter, while Brisbane, Adelaide and Perth had small decreases. Darwin, down 4.6% in three months, was the only capital city with a significant decline.

The median price for units also recorded a marginal rise (0.3%), with five of the eight capitals recording increases, led (rather surprisingly) by a 2.2% increase in Hobart.

In annual terms, house prices in the capital cities are 1.9% below the levels of last year, while the average across the eight cities for units is a decrease of 0.4% (effectively, no change).

For me, the standout figures relate to Brisbane. Brisbane’s median house price has fallen only 5% in 12 months and the unit median only 2.5%, despite the devastation of the January floods.

This appears to be a stronger performance than that following the 1974 floods when, according to Real Estate Institute of Queensland data, average prices dropped 10% in the six months after the event.

Perth continues to be the worst performing city, with house prices down 5.6% in annual terms and unit prices down 5.8%. There was, however, a small improvement in the unit median price in the May quarter and only a small decrease in the house median – and I believe Perth prices will start to rise soon, once some of the mega resources projects begin construction.

The overall picture with prices in our biggest cities is one of a fairly resilient market which is holding up solidly, despite low consumer confidence and constant media speculation about interest rates.

ENDS

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