NSW housing pushes ahead while other markets remain soft.

Housing dollar


The pre­lim­in­ary cap­ital city dwell­ing value index res­ult for Decem­ber was –0.2% (s.a.) fol­low­ing an upwardly revised +0.4% rise in dwell­ing val­ues in Novem­ber (was +0.1%). Revised regional house val­ues for Novem­ber increased from +0.3% to +0.5%. Sydney hous­ing has been the nation’s best per­former with dwell­ing val­ues up 0.4% in Decem­ber and by 0.7% over the quarter (s.a.).

In the gen­er­ally sea­son­ally weak month of Decem­ber, the pre­lim­in­ary RP Data-Rismark Home Value Index res­ult for cap­ital city dwell­ing val­ues was –0.2 per cent (s.a.). Low sales volumes in Decem­ber mean that this num­ber will likely see a more sig­ni­fic­ant revi­sion than normal.

The Novem­ber res­ult from the RP Data-Rismark index for dwell­ings in cap­ital cit­ies has revised up from +0.1 per cent (s.a.) to +0.4 per cent (s.a.) based on addi­tional sales inform­a­tion. This marks the largest month-on-month improve­ment in Aus­tralian home val­ues since May 2010.

The RP Data-Rismark ‘rest-of-state’ index, which cov­ers Australia’s regional mar­kets, has also revised up in Novem­ber from +0.3 per cent to +0.5 per cent (s.a.). This is the most sig­ni­fic­ant increase in regional house val­ues since Novem­ber 2010.

Over the Decem­ber quarter, Australia’s cap­ital city home val­ues declined by –0.5 per cent (s.a.).

RP Data’s dir­ector of research Tim Law­less, said, “The Decem­ber quarter was the year’s smal­lest quarterly decline. Accord­ing to our index, cap­ital city home val­ues fell by –1.5 per cent (s.a.) in the March quarter, and by a fur­ther –0.8 per cent (s.a.) in each of the June and Septem­ber quar­ters. This rate of decline had decel­er­ated to –0.5% by the final quarter of 2011.”

In 2011, Aus­tralian cap­ital city dwell­ing val­ues exper­i­enced a cap­ital loss of about three and a half per cent. Regional house val­ues fared a little bet­ter, cor­rect­ing by around three per cent. This com­pared to the 14–15 per cent decline in Aus­tralian shares. Adding in rents, the gross total return to Aus­tralian prop­erty investors was slightly less than one per cent over 2011.

Rismark’s man­aging dir­ector Ben Skil­beck said, “The month of Decem­ber is char­ac­ter­ised by a sig­ni­fic­ant lull in activ­ity and the pre­lim­in­ary index res­ults have likely been influ­enced by some more volat­ile Mel­bourne and Perth estim­ates. We expect to get bet­ter clar­ity on the monthly move­ments as more inform­a­tion is reported.”

Sydney cur­rently has the largest volume of repor­ted sales in Decem­ber. In seasonally-adjusted terms, Sydney dwell­ing val­ues rose by 0.4 per cent in the month of Decem­ber. In the Decem­ber quarter, Sydney dwell­ing val­ues are up a total of 0.7 per cent (s.a.)” Mr Skil­beck said.

RP Data’s Tim Law­less observed that rental mar­kets con­tin­ued to strengthen in December.

Weekly rents across the cap­ital cit­ies were up 1.0 per cent over the Decem­ber quarter and are now 6.3 per cent higher than at the same time last year.”

These higher rental rates com­bined with the slide in prop­erty val­ues have improved investors’ yields. The aver­age cap­ital city dwell­ing is now offer­ing a gross rental return of 4.6 per cent after a con­sist­ent trend upwards since mid-2010 when the typ­ical cap­ital city dwell­ing was yield­ing just 4.1 per cent. Dar­win and Can­berra are the highest yield­ing loc­a­tions for prop­erty investors while Hobart, Bris­bane, and Sydney provide gross yields that are bet­ter than aver­age,” Mr Law­less said.

On the out­look for the year ahead, Rismark’s Ben Skil­beck com­men­ted, “We expect that the RBA’s interest rate cuts in the final two months of 2011 will lend fur­ther momentum to hous­ing activ­ity as trans­ac­tion volumes pick up over Feb­ru­ary and March after the sea­son­ally slow months of Decem­ber and Janu­ary. If fin­an­cial mar­ket pri­cing for sub­stan­tial addi­tional RBA rate cuts proves accur­ate, we could see a stronger-than-expected bounce-back in hous­ing conditions.”

Hous­ing afford­ab­il­ity in Aus­tralia has exper­i­enced a strik­ing improve­ment in recent times. While dis­pos­able house­hold incomes on a per house­hold basis rose by five per cent over the year to Septem­ber 2011, Aus­tralian dwell­ing val­ues have declined by 3.4 per cent since Septem­ber 2010. As a res­ult of the RBA’s rate cuts bor­row­ers can now get fixed– and variable-rate home loans as low as 5.9 per cent and 6.14 per cent. Rismark’s research shows that dis­pos­able incomes per house­hold have risen about 15 per cent fur­ther than Aus­tralian dwell­ing val­ues since the end of 2003. This helps account for the decline in Rismark’s national dwell­ing price-to-income ratio, which is as low as its been since 2003” Mr Skil­beck said.

RP Data’s Tim Law­less added, “While global uncer­tainty and a stag­nant local labour mar­ket could weigh on the consumer’s mind­set, we are nev­er­the­less observing improve­ments in monthly hous­ing fin­ance com­mit­ments. RP Data’s lead­ing indic­at­ors on aver­age selling times and vendor dis­counts are also start­ing to look health­ier. There is no doubt that addi­tional interest rate relief in 2012 would afford a very wel­come cush­ion to the hous­ing market.”


Jhai is an award win­ning Inter­net Mar­ket­ing Real Estate Agent for Eld­ers Toongab­bie and Kings Langley. After run­ning his own inter­net mar­ket­ing busi­ness he has now set his own sites for the real estate industry. He observed that 90% of real estate agents did not know how to mar­ket them­selves online. Jhai is now fixed on one goal. To teach real estate agents that they can mar­ket online so much bet­ter than they cur­rently are.

Since then he has been con­sist­ently quoted in the Sydney Morn­ing Her­ald and Real Estate Busi­ness online. He is a reg­u­lar guest blog­ger on TheHomePage.com.au, shar­ing his expert­ise of mar­ket­ing aspects for the Real Estate Industry. His biggest pas­sions are his wife, mar­tial arts, dogs and most of all property.

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