House prices headed south

by Adam Smith04 Jun 2012

The Reserve Bank's rate cuts have yet to provide a boost to the housing market, with median prices continuing to head south.

The RP Data-Rismark Home Value Index has indicated that home values continued to fall in May. Capital city home values fell 1.4% for the month, for a cumulative decline of 2.2% for the first five months of the year and a 5.3% year-on-year drop.

Adelaide was the only capital city to see improvement over the month, with home values rising 1.2%. Melbourne saw the steepest declines at 2.7%, followed by Darwin at 2.4%.

RP Data research director said declines were driven by detached housing rather than units. Lawless said unit values had proven more resilient than detached housing.

"It is clear that the market is becoming increasingly price point driven. Unit values across the combined capitals increased in May, and they are up 1.3% over the first five months of the year. Based on median prices, unit prices are generally around 15-20% lower than house prices," he said.

Lawless said yields on units tended to be higher as well, and that units were generally "located more strategically" than detached housing.

The performance of premium housing also gave evidence of the price driven market. Housing in the most affordable 20% of suburbs fell by 1.5% for the year to May, while premium dwelling values fell 6.1%.

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