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Housing prices slip
Released 1 June 2011

Capital city property prices were dragged down by luxury suburbs in the three months to April according to a survey.    

The RP Data-Rismark Home Value Index, based on more than 85,000 home sales nationally, saw values fall 1.2%.

Dwellings in the most expensive capital city suburbs recorded a 5.4% loss. In contrast, home values in the middle 60% of suburbs were down by 0.9% Dwellings located in the cheapest 20% were off 0.5%.

RP Data Research Director Tim Lawless said the solid performance of cheap suburbs runs against the grain of popular claims that default rates are rocketing up amongst first time buyers, which the RBA recently rejected.

“The luxury end of the housing market is also showing its volatility. During the growth phase of the cycle the most expensive homes realised the highest capital gains. Yet as the market cools premium home values seem to be losing steam the fastest,” he said.

Rismark Joint Managing Director Christopher Joye added the uber-luxury segment is risky and highly illiquid and has had the rug whipped from under it via a combination of the soaring Aussie dollar and the volatile share market.

"A final fly in the ointment is the much lower growth - and pay packets - expected in the financial services industry going forward. Luxury homes in areas like Sydney’s Eastern Suburbs will continue to face valuation headwinds as banks deal with the new normal of subdued credit growth.”

The national median dwelling price in capital cities is $468,000 based on sales over the three months to April. In the ‘Rest of State’ markets, the national median dwelling price is $325,000. Across all Australian regions, the median dwelling price is currently $418,000.