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Market conditions remain soft
Released 1 March 2011

Disruptions caused by natural disasters and low sales volumes have resulted in soft market conditions across the Australian capital cities, according to RP Data-Rismark figures.   

Capital city values were down 1.6% seasonally adjusted, while the rest-of-state markets saw a 1.2% decline in values.

The median dwelling price in the capital cities was also down to $465,000 over the three months to end January, while the median in the rest of state markets was $325,000.

RP Data's Research Director Tim Lawless said the low number of sales in January can give rise to volatile outcomes, which may lead to revisions.

"The volume of sale transactions in January is normally much lower than other months due to the seasonality of the market. This year the downturn in activity has been compounded by the spate of natural disasters experienced around the country. It is quite possible that the RP Data-Rismark Index results for January will show a larger than normal revision when updated next month," Lawless said.

Rismark's joint managing director Ben Skilbeck added, "There are growing signs of a soft recovery in the housing market after six months of flat dwelling values since May 2010. Housing credit growth looks to be rising a little, and the early auction clearance rate data in February has been a demonstrable improvement over the sub-50 per cent clearance rates at the end of last year.

“Our forecasting model implies low single digit capital gains in 2011 based on the assumption that the RBA tightens monetary policy further.

“However it is noteworthy that the futures market is not pricing in the first full interest rate increase until February 2012. If the RBA stays on the sidelines in 2011 there will be material upside risks to our forecasts."