Australia house prices decline, likely to fall further

Australia’s house prices declined in the March quarter, recording their first quarterly fall in three and a half years, indicating subdued growth in the real estate sector of the country. Also, further fall in housing prices is expected in the near term amid growing uncertainty and global volatility.

Residential prices dropped 0.2 percent in the March quarter, the first fall since the September quarter of 2012. Falling prices of apartments, led by Melbourne, Perth and Canberra, drove the weakness, data released by the Australian Bureau of Statistics showed Tuesday.

However, prices in Melbourne grew by 9.8 percent in the year to March, just overshadowing Sydney where prices rose 9.7 percent. According to Knight Frank’s Global House Price Index for the first quarter of 2016, Australia ranked sixth in the world for annual price growth, at 8.7 per cent.

Despite Australia’s recent official cash rate cut to 1.75 per cent, prices are unlikely to keep growing at the same rate given mortgage debt is at a record high relative to income, and December 2015 saw the introduction of new fees for foreign buyers, the Index showed.

According to Tom Kennedy, Economist at JP Morgan, the number of apartments that are expected to come out in the market next year are likely to witness a rapid expansion, a signal that prices may decline even further.

Meanwhile, Turkey was the top-ranked country for annual price growth, recording a 15.3 percent increase in the 12 months to March 31, 2016. Sweden was next best, with 12.9 per cent growth, followed by New Zealand (11.0 per cent) and Lithuania (10.5 per cent), with Malta rounding out the top five with 9.9 per cent growth, reports confirmed.