REIA data confirms strength in cheaper areas

Posted on 17/03/2009  

The latest price data published by the Real Estate Institute of Australia confirms the market patterns that we have been expecting: the upper end is declining and the bottom end is holding up strongly.

 

The REIA’s Real Estate Market Facts report published this week also confirms that most of our capital cities are proving resilient against the economic storm. The only city with a major decrease in the median house price in the December Quarter was Perth.

 

The report found that house prices in the December quarter …

 

·         rose slightly in Sydney, Hobart and Darwin;

·         were unchanged in Canberra;

·         fell slightly in Melbourne, Brisbane and Adelaide; and

·         fell a lot in Perth

 

In terms of unit prices, it found that ….

 

·         median prices rose substantially in Darwin;

·         rose slightly in Adelaide, Hobart and Canberra; and

·         fell slightly in Sydney, Melbourne, Brisbane and Perth.

 

The best result among the capital cities for house prices was in Darwin, where the median price rose 1.4% in the December Quarter. At the opposite end of the scale, the median price for Perth declined 5.2%.

 

In between those extremes, the price movements (both up and down) in other cities were too minor to be of any significance.

 

The median unit price in Darwin increased 7.2% in the December Quarter, while Perth was again the worst-performing capital city market, dropping 2%. As with houses, the unit price movements in between the best and worst performers were minor.

 

In annual terms, Darwin and Adelaide are now the only cities with median house prices above the levels of a year earlier. Sydney, Brisbane and Hobart have recorded minor falls over 12 months (down 2% or 3%), while Melbourne (down 9.8%), Perth (down 12.2%) and Canberra (down 8.9%) have had larger declines over 12 months.

 

But the most revealing figures are the ones that segregate city markets into inner, middle and outer ring suburbs. In most cities, the cheaper areas (outer ring) have performed considerably better than the more expensive areas closer to the CBDs.

 

In Melbourne in 2008, inner ring suburbs fell 4.4%, middle ring suburbs rose 1% and outer ring suburbs improved 2.1%.

 

In Brisbane, the median house price for the inner ring suburbs fell 7.4%, while the middle ring suburbs declined 1.9% and the outer ring only 0.8% (effectively, no change).

 

In Adelaide, the median house price for inner ring suburbs fell 0.7% (effectively, no change) in the inner ring suburbs, but rose 3.5% to 4% in both the middle ring and outer ring areas.

 

In Hobart, inner ring prices fell 6.5%, while middle ring suburb decreased 1.7% and outer ring only 1%.

 

We expect a continuation of this pattern throughout the rest of 2009. The cheaper areas in most cities will show activity and some price growth, but the overall effect will be a lowering in the median price across most cities.

 

ENDS

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