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SYDNEY: Australian home prices in major cities slipped 0.4% in August, the smallest fall since April, as expectations for interest rate hikes waned, and prices could recover if rates do indeed drop, property consultants RP Data and Rismark said on Friday, Sept 30.
"There's been a big shift in interest rate expectations," said Rismark economist Christopher Joye.
"Households have been banking on being hit by a series of interest rate increases and that hasn't come to pass. And if rates fall, house prices I think will likely rise," he added.
The Reserve Bank of Australia had considered hiking rates as recently as August but the turmoil on global markets has since shifted it to the sidelines and most analysts see it staying on hold for months to come.
A series of rate hikes in 2009 and 2010, and expectations for more rate increases to come are the chief reason house prices fell 3.2% compared to a year earlier.
Still, prices in Sydney, the nation's biggest city, were resilient, remaining unchanged in August on a seasonally adjusted basis and rising 0.3% from a year earlier.
But prices in Melbourne dropped 0.2% from the previous month and 4.3% from a year earlier.
Price drops vary with the most expensive fifth of suburbs recording a drop of 5.5% in capital value over the last year, compared with a 3.1% loss across the broad middle market, according to RP Data and Rismark.
RP Data this week issued another report on home equity which showed that 3.7% of home owners across the country were in a negative equity position where the current value of their home was less than what they originally paid for the property.
The report also said just over 45% of homes across Australia are worth more than twice what the owner originally paid. — Reuters
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