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Capital city house prices decline
Released 1 October 2010

House prices in capital cities fell 0.2% in August compared to July, but rose 8% from a year earlier, according to RP Data-Rismark data.  

The RP Data-Rismark Capital City Home Value Index, which peaked in May 2010, has declined by 1.2% in the three months to August. The current median dwelling price in all capital cities is $457,000.

In the ‘Rest of State’ markets, which cover the 40% of homes not located in capital cities, the RP Data-Rismark Hedonic House Value Index was unchanged in August, following a 0.4% seasonally-adjusted decline in July.

Rismark International Managing Director Christopher Joye noted that the Australian housing market’s soft-landing has been broad-based.

“The weakness since the end of the first quarter has been seen across all cities. Interestingly, Sydney and Canberra have been the best performing conurbations since the market’s May apogee.”

According to Tim Lawless, RP Data’s Research Director, 12 months ago mortgage rates were 160 basis points lower and the market was still benefiting from the first home buyers boost.

“Since the RBA has normalised rates with six hikes, combined with additional bank top-ups, capital growth has halted. However, property owners are still realising positive total returns due to the effect of direct or imputed rents.”

Lawless added, “Rental yields across the capital cities are now showing signs of improvement. RP Data and Rismark estimate that the gross yield on units is 4.9% while for detached houses it is a lower 4.0%. On a total return basis, Australian housing has outperformed most other asset-classes over the last 10 years.”