Australian house prices have fallen for the fifth consecutive quarter, with a glut of properties for sale. Australian Property Monitors reports national median house prices fell by 1.6 per cent in the September quarter. Unit prices also fell, down by 0.6 per cent. The largest falls were in Brisbane. Hobart was the only capital city to avoid the downward trend, recording no change over the three months, and that was the good news. There are tens of thousands more properties for sale today than there were at the start of the global financial crisis. APM says that even a fall in interest rates is unlikely to have a significant impact on house prices. But it will provide some relief for mortgage holders and marginally improve housing affordability.
On that note, is it time for an interest rate cut? The Real Estate Institute of Australia and Housing Industry Association think so, calling on the Reserve Bank to reduce rates in response to the latest Consumer Price Index figures showing inflation is slowing down. The headline Consumer Price Index rose by 0.6 per cent in the September quarter for an annual inflation rate of 3.5 per cent, in line with expectations. However, the key underlying inflation rate, used by the Reserve Bank, came in at half the market's expectations at just 0.3 per cent for the last three months, the lowest on record. The last interest rate rise was Melbourne Cup day a year ago. Three of the big four banks are now predicting a win for punters with an interest rate cut for this year's race day.
And how far will property prices fall? Well, one theory suggests the future of Australia's property outlook will be heavily influenced by the baby boomer generation over the coming decades. That's according to economist Leith van Onselen whose credentials include positions at the Victorian and Australian Treasury. The baby boomers represent a quarter of Australia's population, but own 49 per cent of the nation's housing assets. Now they're heading into retirement and it's likely they'll free up their property assets to finance their lifestyles. We're likely to see a selling of investment properties and holiday homes and downsizing, as baby boomers sell the large family home. And that will put downward pressure on house prices. But the question remains, how severe will it be?
