House prices and rents steady – for now

Australian housing prices remained steady in all capital cities except for Perth, new figures have revealed, while separate data shows the rental crisis is far from over.

New figures from Residex reveal a 0.6% rise in housing prices in March, the largest monthly gain since March 2008. While prices are still down over the first three months of the year, the rate of decline has slowed.

The new figures reveal Sydney recorded price gains of 0.9% in March and 0.8% in the first quarter, while Melbourne prices jumped 1.6% in March to be up 0.5% for the quarter.

Adelaide recorded a 0.8% increase in March to be up 1% for the quarter, but Brisbane housing prices have now fallen by 1.8% during the quarter.

The exception to the rule has been in Perth, where housing prices fell 1.9% in March to bring the quarterly fall to 3.9%.

Westpac economist Julene Lee has said that housing prices “continue to hold the line well in most capital cities, with signs that improved demand (finance approvals have surged 16% since bottoming in September) is providing more support in the first quarter of 2009”.

“The 2001-02 experience suggests the run-up in first home buyer interest is now largely over, although demand will hold at current levels for a while yet.”

But while housing prices appear to be headed down this year, separate data has indicated rental prices are on their way back up.

The Australian Property Monitors rental series released yesterday has shown rents for most capital cities have remained flat during the first quarter, but experts believe they will have to rise eventually due to falling supply.

Rents in Sydney, Melbourne, Adelaide and Darwin recorded no growth whatsoever during the first quarter, while Canberra has seen a 4.8% decline in growth.  

APM senior economist Matthew Bell said that rental prices are likely to stay lower for the foreseeable future, but they will inevitably see upward growth trends.

“It depends to a large extent on how weak the economy gets in terms of employment and incomes. As long as that goes, renters are going to have a hard time funding any increase.

“We can see low growth rates occurring for another quarter to the end of the year, but it’s hard to see with such low vacancy and building rates that renters will have it good for too long a time.”

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