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ISCOVER
Staff Reporter
Australia's capital cities could continue to see property price corrections, Residex has claimed.
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According to Residex's chief executive John Edwards, housing markets around the country are at a cross road.
"Prices continued to weaken in almost every capital city over January. Our data suggests we are moving beyond the bottom of the cycle however the trend is not pronounced," Mr Edwards said.
Mr Edwards said the less affordable end of the market, house and land, remained weak.
"On an Australia-wide basis we do not look as if we are through the worst of the correction phase. In most capital cities, while we may have reached the bottom of the cycle, there is no strong movement towards positive territory," he said.
"The next few months will be crucial in determining where markets head. However, as the reality of the actual performance of housing markets becomes evident we can expect to see further weakness and potentially ongoing price corrections."
Mr Edwards said the Reserve Bank's decision not to cut rates this week was a missed opportunity to inject confidence among buyers and sellers.
"The property market is on a knife edge. A rate cut would have had an important impact on affordability and boosting confidence," he said.
Mr Edwards said the Reserve would remain under pressure to cut rates in early 2012.
"While Australia's property market does not face the same risks as those that led to the collapse in US housing prices, we face continued headwinds including the high Australian dollar and the high cost of housing. We need to encourage home ownership otherwise we will arrive at a situation where the cost of rentals is unacceptably very high," he said.
