Tuesday, November 04, 2008
The Bureau of Statistics reports that Australian capital city house prices fell 1.8% between the June quarter and the September quarter of this year – the biggest slide since its reports began. Melbourne prices slid 1.9%.
The news would be disturbing were it not for a pattern that has been developing after these “preliminary” figures have been published.
Three months ago the Bureau's preliminary figures suggested that Melbourne house prices slid 0.3% between the May and June quarters.
This week it quietly revised that result up to a jump of 1.0%.
The recent pattern has been for the headline-grabbing preliminary reports to show weak house prices and later less-publicised revisions to show improvements.
The Bureau says this is because it gets its preliminary information from the banks who collect house price data when they approve loans. It later replaces it with the more comprehensive data collected by land titles offices.
Recently the makeup of the banks' loans has changed...
They have acquired new customers who would have once borrowed from non-bank lenders, many of them for lower-value houses. It's making the preliminary estimates of house prices less reliable than they used to be and usually more negative than they should be.
Melbourne house prices may well be sliding as this week's figures suggest, but probably not as fast as those figures suggest, and almost certainly not faster than at any time since the 1970s as the figures suggest.
A new supplier of house price information RP Data believes that that prices are showing signs of recovering. Owned by the shared-equity mortgage provider Rismark International, RP collects detailed information from agents which allows it to compare like sales with like sales - the same number of bedrooms in the same suburb, a method it believes gives a truer picture.
It's indicative figures for the September quarter suggest that prices fell 0.5% nationally, down from 2.0% in the preceding quarter. It says Melbourne prices scarcely moved, falling 0.02%.
Melbourne houses and units sold faster than in any other capital. Melbourne houses were sold in an average of 35 days compared to 39 days in Sydney and 61 in Perth.
RP Data's national research director Tim Lawless said he expected the lower-priced segments of the market to recover first, “with first home buyers leading the charge” to take advantage of dramatically lower interest rates and the doubling of the first home buyers grant.
“Premium priced properties will take significantly longer to recover as these markets are much more heavily influenced by the ongoing pain being inflicted by the share market, lower company profits and lower than than expected bonuses,” Mr Lawless said.