The Reserve Bank of Australia lowered the cash rate by 50 basis points to 3.75 per cent because of weaker than expected economic conditions and moderating inflation. Of interest was the RBA's comments that the reduction of 50 basis points in the cash rate was judged to be necessary to deliver the appropriate level of borrowing rates. Media reports speculate the Reserve Bank lowered the rate by a full 50 basis points in the hope that at least some of the cut would be passed on by the banks in the form of interest rate reductions for borrowers. If the banks pass on a 0.25 per cent cut, mortgage holders will save around $50 a month on a $300,000 loan.
And new home sales fell to their lowest level in more than a decade in March according to the Housing Industry Association. Its New Home Sales Report, based on a survey of Australia's one hundred largest builders showed a sharp decline of 9.4 per cent in total seasonally adjusted new home sales.
Now to house prices, and we've had a lot of information out recently from different sources.
RP Data reports capital city dwelling values were down 0.8 per cent in the month of April after a stable first quarter. On a year to date basis, dwelling values are down -0.7 per cent. Values were down across five of the eight capital cities over the month of April, with Hobart, Melbourne and Brisbane recording the largest falls.
So while RP Data is reporting a stable first quarter, APM reports median house prices rose in most capital cities over the first three months of the year. It says the national median house price rose by 0.9 per cent with the median unit price rising by 0.1 per cent.
So did house prices rise or stay flat? Well, the Australian Bureau of Statistics reports capital city house prices fell 1.1 per cent in the March quarter. The capital city indexes fell in Melbourne, Sydney, Adelaide and Hobart and rose in Perth, Brisbane, Canberra and Darwin. Estimates show that prices for the eight capital cities fell 4.5 per cent in the year to the March quarter.
So what is it then? Did house prices fall, rise or stay flat for the first quarter? It seems we're getting different sources producing very different results. Some say property prices are going up, others say it's decisively down. They're all seeking to measure the same thing but they're using different methodologies to do it. The Age Journalist Chris Vedelago says 'it's almost perfectly calculated to do your head in'. SQM Research Managing Director Louis Christopher and Economist Steve Keen say the ABS figures are the ones they'll be taking the most notice of. As Steve Keen controversially puts it, 'There are several providers of statistics on Australian house prices, but only one that doesn't have a vested interest in the direction house prices actually move in: the Australian Bureau of Statistics,' says Keen.