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ISCOVER
Staff Reporter
Home values have dropped by more than 1 per cent, with consumer confidence lower in May.
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According to RP Data-Rismark’s latest capital city index, dwelling values also dropped by 1.2 per cent in May.
The fall comes on the heels of a 0.5 per cent drop in April.
Based on the index results, capital city dwelling values are now 1.1 per cent higher over the first five months of 2013 and 2.9 per cent higher than May last year (which is also when the housing market hit a recent low point after values corrected by -7.4 per cent from peak to trough).
According to RP Data national research director Tim Lawless, the weak May result comes on the back of a substantial fall in consumer confidence over both April and May which can partly be attributed to a growing level of uncertainty about domestic economic conditions and possibly a sour reaction by consumers to the federal Budget announcements in mid-May.
“The RP Data-Rismark daily index tracked higher from late April through to the 10th of May, and then went into a consistent decline over the remainder of the month. How much of this downward pressure can be attributed to the lower confidence reading is anyone’s guess, but the correlation of housing market conditions with consumer confidence is a strong one.
“If we see confidence levels remain in the doldrums, there is likely to be a similar dampening effect on the housing market,” Mr Lawless said.
Based on today’s indices results, the fall in dwelling values over the month of May and for the quarter were broad-based, with all capital cities apart from Perth and Hobart recording a fall in values over the month, and with half of the capital cities recording a fall in values over the quarter.
While most cities experienced softer conditions, Mr Lawless noted that Melbourne stands out as being one of the weakest performers.
“The combined capital city index is stock weighted, meaning that larger cities like Sydney, Melbourne and Brisbane have a larger impact on the aggregated results. With Melbourne dwelling values down by 2.1 per cent over the month and 1.9 per cent over the last three months, the pull-down effect on the aggregated index has been substantial,” Mr Lawless said.
Mr Lawless noted that the two months of lower dwelling values come at a time when several metrics, such as auction clearance rates, vendor discounting, time on market and transaction volumes, are performing well.
“Auction clearance rates have been nudging the 70 per cent mark on a weighted average basis over the past couple of months, with average selling time improving and vendors now offering up lower discounts from original asking prices in order to make a sale. We have also seen the number of house and unit sales rise compared with the same time last year,” Mr Lawless said.
