Australia’s hot property market looks to be cooling down with home prices posting the biggest fall in more than five years. The RP Data – Rismark Home Value Index retreated 1.9 per cent in May but is still 10.7 per cent stronger over the year. Across the states Melbourne led the falls with a drop of 3.6 per cent as Brisbane declined 1.7 per cent and Sydney prices slipped 1.1 per cent. Adelaide prices dipped 1.8 per cent, Perth eased 0.8 per cent and Hobart lost 0.6 per cent but prices lifted in both Darwin and Canberra. The most expensive city was again Sydney with a median dwelling price of $678,500 while Hobart came in as the most affordable with a median dwelling price of $345,000.
FNN speaks with RP Data Senior Research Analyst, Cameron Kusher
“Home values fell by 1.9 per cent in May and if you have a look at what we’ve seen over the past 24 months or so it’s been quite strong growth in property values and obviously Sydney and Melbourne have been very strong. But on a quarterly basis property growth peaked last August last year and since that time we’ve seen the rate of growth slow. We’ve also seen consumer sentiment stalling and sales volumes are a little lower now than they were late last year so I think it’s just some of that exuberance in the market now slowing but it will be interesting to see if we continue to see falls or if we just see more moderate levels of growth from here.”
Signs of a cooling property market
In another sign of cooling the Reserve Bank of Australia (RBA) highlighted the property market coming off its highs in its June meeting minutes. The RBA has this week decided to keep Australia’s official cash rate on hold at an historical low of 2.5 per cent for its ninth straight meeting. Commenting on the property market the central bank says dwelling prices have increased significantly over the past year and noted some signs of the pace of growth moderating. The Housing Industry Association applauded the RBA’s message that interest rates are on hold for a considerable period of time and hopes the stability will maintain a positive environment for residential construction.
Approvals for the construction of new homes dropped in April for the third straight month after reaching a decade high in January. The Australian Bureau of Statistics reports new homes building approvals fell 5.6 per cent in April after falls in March and February but are still 1.1 per cent stronger over the year. Westpac Banking Corporation (ASX:WBC)
says the result was well below expectations of a 2 per cent rise and Westpac's bottom of the range forecast of a 1 per cent decline.
Australian auction results
Sydney recorded a 79 per cent clearance rate from 907 properties for auction
Melbourne posted a 74 per cent clearance rate from 1,165 properties for auction
Brisbane booked a 52 per cent clearance rate from 124 properties for auction
Adelaide saw a 50 per cent clearance rate from 56 properties for auction
Commercial property sector
Industrial property investor Australand Property Group (ASX:ALZ)
has received a $2.6 billion takeover bid from Singapore-listed Frasers Centrepoint, trumping a $2.5 billion bid from Australian property developer Stockland (ASX:SGP)
Property group Growthpoint Properties Australia (ASX:GOZ)
has bought the New South Wales Police Headquarters in Parramatta for $241 million.
Engineering company UGL Limited (ASX:UGL)
has confirmed it has received proposals for its global property services business DTZ though a deal is yet to be done.
Abacus Property Group (ASX:ABP)
has confirmed its industrial portfolio may be sold with a potential purchaser currently undertaking due diligence on the assets.