Property prices unexpectedly rose in the June quarter despite buyers receiving conflicting signals about the outlook for the property market.
House prices rose 0.5 per cent in the June quarter, following an upwardly revised 0.1 per cent drop in the March quarter, the Australian Bureau of Statistics said. Economists polled by Bloomberg tipped a 0.5 per cent fall.
Over the year to June, house prices fell 2.1 per cent, after an upwardly revised 3.5 per cent fall in the year to March, the ABS said. The drop was the fifth consecutive quarterly fall on a year-on-year basis in the ABS series which began in 2003.
Analysts had forecast a 4.2 per cent drop in the year to June.
Values on residential property have drifted lower through much of the year, as consumers show caution about borrowing for properties and the outlook for the economy remains unclear.
The Reserve Bank, responding to a broader slowdown in the domestic sector, has cut rates four times since November, helping to buoy prices in June and July, according to RP Data figures released today.
ANZ property economist David Cannington said the June-quarter data was stronger than expected but it did not suggest a recovery in house prices.
“It’s still too early to call a turnaround in house prices because of the weak sentiment and weak sales activity in the market,” said Mr Cannington.
The property market continues to be dogged by poor confidence, said Mr Cannington, with the European debt crisis and uncertainty about the health of the global economy likely to continue to weigh on market sentiment in the near-term.
The 75 basis points in RBA rate cuts in May and June should help prices in the September quarter, said Mr Cannington.
‘‘But on their own I don’t think the rate cuts are enough to trigger a turnaround in house prices given the weakness of sentiment.’’
Sydney house prices increased 1.4 per cent in the quarter, while Melbourne prices slipped 0.4 per cent, the ABS said.
Brisbane house prices edged up 0.1 per cent and Perth’s increased 0.6 per cent. Canberra’s fell 1.3 per cent, outpacing Hobart’s 0.4 per cent drop in that time.
House prices in Adelaide rose 0.5 per cent, the ABS said.
Westpac senior economist Matthew Hassan said the surprising strength in the index may have been driven by the end of first-home buyers’ incentives in New South Wales and Victoria.
‘‘I suspect that’s having an impact in some way on how the measures are picking up activity,’’ he said.
Mr Hassan said the ABS data and earlier figures from RP Data showed the market may stabilising.
RP Data-Rismark’s capital city home price index rose 0.6 per cent in July, after a 1 per cent rise in June.
‘‘With rates where they are at the moment, it should be enough to stabilise the market,’’ said Mr Hassan. ‘‘I don’t know if it will be enough to generate an upturn,’’ he said.
Market sentiment remains quite fragile and susceptible to shocks from offshore, which could trigger the need for more rate cuts, he said.Source: BusinessDay
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