The house price numbers are already in from the September 2013 quarter. If you owned an ‘average’ house in Sydney or Melbourne then it is likely your property increased in value by a useful 1.3 to 1.8 percent or about $10,005.
Sadly for the rest of the country house prices fell with Queensland suffering the biggest falls, and Perth and Hobart suffering the second highest falls.
For those of us with an ‘average’ property in Perth we could expect to get about $8,500 less for our property than we could have got in the June quarter—assuming we could find someone to buy our house.
On the upside for Perth more properties were being sold in Q3—albeit at lower prices.
With the betting about 50:50 on whether the Reserve Bank will drop the cash rate lower than 2.5 percent this could be the end of the interest rate reductions. About half of the experts are tipping that the next rate move could be upwards even though the Australian dollar remains much higher than the Reserve Bank would like to see it.
The big problem for Perth is that new home starts are still at record lows. So while established properties are starting to move because sellers are now prepared to drop their asking prices, the new housing stock becoming available is still not keeping up with current demand. Investors are being very cautious about building new homes due to the huge drop in resource projects and the general shocking state of state finances in Western Australia; and prices—especially for land—are still too high for your average couple to consider committing to building a new home.
To give you some idea, in relative terms to the population new home starts are only about 50 percent of what they were in the 1980s. You can begin to understand why builders are discounting new homes so much—but it is the cost of land that is making it so hard.