1. August 2011 No. 489
House prices
Much more stoic than most realise.
The best measure of data on residential prices, the RPData-Rismark
Hedonic Index, shows that Australian house prices fell just 0.2% last month.
This equates to an actual drop of $1,200 against a median dwelling value
of about $525,000. Even on a quarterly basis, the drop is just 0.9% or $4,700.
This effectively means no change. Amazing, really, given the low level of
confidence, the high level of advertised stock for resale and the persistent
warnings of a real estate Black Friday. The year-on-year result is a fall of just
2% or $10,600. Even Brisbane, with the impact of the recent flood weighing
down its property market, has fallen just 2.6% or by $11,600 since January.
The Australian sharemarket can fall more than this in a single day.
In addition, RPData’s index, as shown in charts 1 and 2 overleaf, suggests
that maybe the worst is behind us, with the monthly and quarterly results
starting to trend upwards. This recovery is likely to be slower than those in
the past, as many markets (see chart 3) are now priced over $500,000,
which presents an affordability barrier to many buyers and especially
investors and first home buyers. It will take some time before wages grow
enough to start pushing dwelling prices.
Over the last seven years, Darwin’s dwelling values grew the most, up 100%;
whilst Sydney’s grew the least, up by about 25%. Most markets since mid-
2005 enjoyed a lift in end prices of between 35% and 60%. See chart 4.
Interestingly, detached houses (chart 5) experienced the same rate of
capital growth as attached product, although of late, apartments are
gaining the upper hand. Gross rental yields are starting to improve for
apartments (compared to a slight deterioration for detached homes), so
this divergence might start to accelerate.
Recent research by Rismark (chart 6) shows that just one in 14 resales across
Australia over the last decade made a loss. Importantly, close to half of the
sellers since early 2000 made an annual gain of over 10% per annum. Keep
in mind that capital growth can be deceptive, as most measures exclude
inflation, costs, taxes and charges. But still, the results are encouraging.
The time is right to buy. But you must be able to comfortably service a
mortgage at least 1% higher than today’s rates. Also, you need a long
timeframe; the buying power to afford a property close to infrastructure,
and one which can be shared by tenants in order to maximise your rental
return.
The Matusik Snapshot is opinion and not advice. Readers should seek their own professional advice
on the subject being discussed. Comments are welcome, contact me on michael@matusik.com.au

2. 1. 4.
Capital gains/losses Dwelling prices
Australian dwellings Selected states/territories
Sydney
Annual $70,000 220%
Melbourne
change 210%
$60,000 Brisbane 200%
$50,000 Adelaide 190%
Quarterly Perth 180%
$40,000
change Darwin 170%
$30,000 Canberra 160%
$20,000 Hobart 150%
140%
$10,000 130%
$0 120%
Monthly 110%
change -$10,000
100%
-$20,000 90%
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Sep-05
Dec-05
Mar-06
Sep-06
Dec-06
Mar-07
Sep-07
Dec-07
Mar-08
Sep-08
Dec-08
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Dec-05
Feb-06
Aug-06
Oct-06
Dec-06
Feb-07
Aug-07
Oct-07
Dec-07
Feb-08
Aug-08
Oct-08
Dec-08
Feb-09
Aug-09
Oct-09
Dec-09
Feb-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
Matusik Property Insights, RPData-Rismark.
Rolling quarterly and annual actual change in average dwelling values, Matusik Property Insights & RPData-Rismark. June 2005 = index 100.
seasonally-adjusted results. Seasonally Adjusted Hedonic Capital Gains Indices.
2. 5.
Dwelling prices Detached v. attached prices
Australia Australia
$550,000 150%
145%
$525,000
140%
$500,000 detached house 135%
prices
$475,000 130%
125%
$450,000
120%
$425,000 115%
attached product 110%
$400,000
prices 105%
$375,000 100%
$350,000 95%
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Sep-05
Dec-05
Sep-06
Dec-06
Sep-07
Dec-07
Sep-08
Dec-08
Sep-09
Dec-09
Sep-10
Dec-10
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Dec-04
Mar-05
Sep-05
Dec-05
Mar-06
Sep-06
Dec-06
Mar-07
Sep-07
Dec-07
Mar-08
Sep-08
Dec-08
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Matusik Property Insights & RPData-Rismark. Matusik Property Insights & RPData-Rismark..
Seasonally Adjusted Hedonic Capital Gains Index. Seasonally Adjusted Hedonic Capital Gains Indices.
3. 6.
Dwelling prices Capital gains/losses
Selected states/territories Australian dwellings
Sydney 400k
350k
Melbourne
Number of repeat sales
300k
Brisbane
250k
Adelaide
200k
Perth
150k
Darwin
100k
Canberra
50k
Hobart
0k
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Australia
$300k $350k $400k $450k $500k $550k $600k $650k Compound annual growth
Matusik Property Insights, RPData-Rismark. Matusik Property Insights, RPData-Rismark.
Seasonally-adjusted results as at June 2011. Actual gains/losses made between January 2000 and mid-201.
Michael Matusik
Queensland’s leading independent property analyst
Courier Mail columnist | ABC radio commentator | Author & digital
broadcaster | Public presenter
Michael Matusik is no stranger to the residential property sector. He
has worked in the industry for over 25 years and his firm has helped
around 550 residential projects come to fruition. independent – perceptive - to the point
we make residential work
Michael authors the Matusik Snapshot, a fortnightly subscription
report covering pertinent aspects of the residential property market. Phone 07 3720 9988
Email office@matusik.com.au
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