March Quarter 2011 Property Prices

The Latest Capital City House Prices Changes For 2011

The property crash advocates out there may find some more ammunition following the release of the March quarter house price changes from the ABS this week.

All capital cities excluding Perth and Hobart had house price decreases during the March Quarter of 2011. All other capitals excluding Canberra saw a decline of at least 1% for the quarter. The worst offenders were Melbourne and Brisbane each dropping 2.5%.

The weighted average change was -1.7% , a level not seen since the peak of the financial crisis in the September quarter of 2008.

House Price Changes Quarter On Quarter March 2011

Property Price Changes Australian Capital Cities March Quarter 2011

Source: Derived From ABS Data

It’s not all bad news

Don’t go selling everything just yet! There are good reasons for this fall;

 

  1. Interest rate rises
  2. Phasing out of first home owner incentives
  3. An adjustment from the massive price increases in 2010

That’s right; while the March Quarter of 2011 saw a sharp decline, the year on year change for the adjusted average was actually only marginally negative with a -0.2% drop. All capitals excluding Perth and Brisbane actually rose for the year. Some may say the RBA just is doing its job by keeping house prices stable.

House Price Changes Year on Year, March Quarter 2011

Property Price Changes Yearly Australian Capital Cities March Quarter 2011

Source: Derived From ABS Data

Where are prices heading?

The million dollar question. With interest rate rises predicted in the last quarter of 2011 some are predicting that house prices will continue their decline. If the property bears are to be believed prices may contract into the double digits.

 

However with:

  1. tightening vacancy rates
  2. increasing stock deficiency
  3. solid rental growth
  4. improving consumer sentiment

It could be said that prices will recover and lead to an increase in prices for the 2011 calendar year.

See what will happen if prices change

Don’t forget you can use our Investment Calculator to do a comprehensive property analysis and see what the effects will be of property price changes.