Housing Flat in February - almost no growth over past year

From RP Data Press Release today:

"February's index result (0.0 per cent s.a.) suggests that Aussie home values continue to tread water despite robust household income growth. There was little revision to RP Data-Rismark's January estimates.

After a natural disaster-affected January (-1.5 per cent seasonally-adjusted or -0.7 per cent raw), RP Data-Rismark's Hedonic Index reports that Australian home values held ground during the month of February.

In the capital cities, RP Data-Rismark recorded flat dwelling values (0.0 per cent seasonally-adjusted or a slightly stronger +0.7 per cent in actual 'raw' terms). The 'rest of state' areas, which account for the 40 per cent of homes not located in the capitals, also displayed some improvement during February with house values rising by 0.5 per cent seasonally-adjusted (+0.3 per cent raw).

Over the 12 months to end February, Australia's capital city home values have hardly moved, rising by only 0.8 per cent. The story is the same in the rest of state regions, where home values remain unchanged (-0.2 per cent) over the last year.

In the property investment market, RP Data-Rismark estimate that gross apartment and detached house yields were 4.8 per cent and 4.2 per cent, respectively, in February. Darwin (5.7 per cent), Canberra (5.3 per cent), Sydney (5.1 per cent) and Brisbane (5.1 per cent) all offer reasonable rental yields in the apartment market. Melbourne is the laggard at 4.2 per cent. ...

A (near) double interest rate hike in November 2010 combined with numerous natural disasters has conspired to make the last three months difficult ones for Australia's housing market. ... While the weakness has been evidenced right across the nation, it has been especially acute in Darwin (-9.0 per cent) and the two resource-centric capitals, Brisbane (-3.3 per cent) and Perth (-1.9 per cent).

"Recent RBA analysis also shows that repossessions have been highest in Perth and South East Queensland, which helps explain the poor performance seen in these states. Indeed, Perth home values remain 0.7 per cent below their December 2007 levels", Mr Kusher added.

Over the 12 months to February, Sydney (+3.3. per cent), Melbourne (+2.5 per cent), Canberra (+0.7 per cent) and Adelaide (+0.6 per cent) have ground out modest capital gains. In contrast, Brisbane (-5.3 per cent) and Perth (-4.1 per cent) have experienced more material corrections. ...

According to RP Data's Mr Kusher, the key leading indicators indicate that capital growth is likely to remain very subdued for the time being, as Rismark and RP Data have previously forecast.

"Auction clearance rates have been a little weak, the number of homes advertised for sale is at the highest level it has been since we started collecting this data, and other lead indicators, such as the time it takes to sell a home, and the margin by which vendors have to discount their properties, are climbing again after reaching a plateau in recent months. Conditions are certainly in the favour of prospective investors. The large stock of homes available for sale should afford potential buyers increasing scope to negotiate on price and get the best possible deal," Mr Kusher said.

See Full Press Release