Housing Prices in the Capital Cites are Suffering
The price of housing in Australia's capital cities has declined by 2.1 percent in the first quarter of 2011 with Brisbane, Perth and Darwin bearing the brunt of the areas hit hardest. Housing prices have declined by 0.6 per cent over the past year.
The homes in these capital cities have posted the largest quarterly fall in the last 12 years. The capital city of Brisbane showed a property value decline of 4.6 per cent and Perth valued a 3.4 per cent decline for the March quarter.
Tim Lawless, the RP Data research director expressed concern that the housing market is advertising homes for more than 30 per cent what they were being offered for last year. Since the property market has been flooded with more available listings, potential home buyers are finding that they are able to attempt to negotiate better deals than in previous years. Grants for first time home buyers are also making it a little easier to achieve home ownership.
The overage of stock results in prospective buyers being able to request lower prices and sellers are being forced to lower their asking prices by as much as 6.5 per cent.
The 4.6 per cent drop in housing prices in the Brisbane area is seemly due to the flood damage that has ravaged that area specifically. The median home price in that area was $455,000. Mr. Lawless said that Brisbane's soft market conditions were due to the severe amount of flooding in the South East Queensland area.
The victims of the floods are left with little comfort, as some of them have no insurance to cover their losses and those that do have insurance face the possibility of waiting for lengthy periods of times for repairs. They may not recoup their loss on property value for many years to come. Prospective buyers will not find the flood damaged areas appealing enough to purchase homes until the damage from the floods has been repaired.
The decline in home values is likely a result in the higher interest rates posted in 2010, which translates into good news for those looking to buy their first home. Typically, first time home buyers in Australia struggle due to the high cost of homes but this lag in the market helps those individuals.
Some analysts believe that the market has been over-inflated for some time and that it needs correction while others feel that continued growth is due to a strong market.
Brisbane has seen the largest decline with an average sale price of a home being $448,669. This compares to $452,546 in Adelaide, according to Australian Property Monitors. Asking prices have dropped anywhere from 10-30 per cent.
The only capital city that has not witnessed any decline in property values is Canberra in that same time frame. This suggests that the floods did have a direct impact on housing values. It is quite possible that the effects of the floods concerning home values will be felt for the rest of the year, especially in the Brisbane area.
March of 2011 proved to be a good month for the landlord. Rental units in capital cities have been posting a gross return of 4.9 per cent for apartments and a 4.2 percent increase for houses. This also translates to an increase in property values for the landlords. Landlords have been able to keep rental prices at a premium due to the demand, and not just from flood victims. The results of the floods saw an increase in the need for rental properties but those amounts have seemed to level out.