House prices have biggest annual fall in 23 years
By Ed Logue02 Feb 2009 3:36 PM
SYDNEY, Feb 2 AAP - Australian house prices in 2008 posted their biggest annual fall in 23 years and there maybe more falls to come, economists say.
House prices declined 3.3 per cent in the year to December, the Australian Bureau of Statistics (ABS) reported on Monday.
It was the biggest annual fall since the ABS data series began 23 years ago.
The ABS also said that house prices fell 0.8 per cent in the December quarter, which was below market forecasts of a one per cent decline.
The drop was the third consecutive quarterly fall.
JP Morgan economist Helen Kevans forecasts house prices to fall 10 per cent in 2009 but the decline would be far less than that experienced in other countries.
"Larger falls in house prices may materialise, although the acute shortage of new homes and accelerating population growth (on the back of higher skilled migration) will provide support for house prices in some cities," Ms Kevans said.
Three capital cities posted quarterly rises in house prices - Darwin (up 1.6 per cent), Canberra (up 0.7 per cent) and Adelaide (up 0.3 per cent).
Melbourne had the biggest quarterly fall, 1.7 per cent.
Only two capital cities posted annual rises, Darwin (up 3.8 per cent) and Adelaide (up 2.0 per cent).
Perth had the largest annual decline, down 6.7 per cent, while Sydney and Canberra both fell 4.1 per cent in the year to December 31.
St George economist Marie Tasevski said investor anxiety had affected house prices but the boost to the first home buyers grant and lower interest rates had helped to offset any drop.
"The decline in house prices comes amid the intensity of the financial crisis late last year where the Australian share market fell by close to 20 per cent in the quarter," Ms Tasevski said.
ANZ economist Alex Joiner said a shortage of housing with lower interest rates and the increase in the first home owners grant would lead to prices firming during the next 12 to 18 months.
"There are large numbers of potential homebuyers that will enter the market as conditions improve," Dr Joiner said.
"In contrast, the US has an oversupply of housing, weak demand and therefore falling prices."
New homes sales fell for the second consecutive month in December, to be down 1.7 per cent and the multi-units category declined 13.7 per cent, the Housing Industry Association (HIA) said.
The Reserve Bank of Australia (RBA) has lowered the cash rate from a 12-year high 7.25 per cent to 4.25 per cent since September.
Home buyers can expect more mortgage relief, with economists forecasting the RBA slashing the cash rate by one percentage point to a 45-year low 3.25 per cent when its board meets on Tuesday.
