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Published 06 December 2012 05:09, Updated 10 December 2012 13:11
House and apartment values are showing a tepid recovery with the help of interest rate cuts but market analysts believe the sector will not be a creator of wealth next year and gains in line with inflation are more likely. Capital city home values have risen 0.4 per cent in the three months to November 30, according to figures by RP Data-Rismark and all except Melbourne, Hobart and Canberra have seen minor gains.
Home values nationally are still 5.6 per cent lower than their peak in 2010 but have risen 2 per cent since May.
“It’s a continuation of this soft recovery we’re seeing,” RP Data managing director Graham Mirabito told BRW. “We think next year we’ll have soft growth of 3 per cent to 4 per cent.”
Perth and Darwin both had growth of about 3 per cent in the past three months but all other capitals were below 1 per cent.
Despite values and sales volumes remaining slow, the housing market has shown some signs of greater activity. Homes now take an average of 48 days to sell, down from 58 days at the same time last year. RP Data also measures how much homes are discounted from their initial asking price to achieve a sale and the average is now 6.6 per cent compared with 7.3 per cent last year. Auction success rates are also improving. It is now common for about 60 per cent of Sydney or Melbourne homes to sell at auction on a given weekend, while earlier this year and last year 50 per cent was typical.
Mirabito says improving affordability, low interest rates and low rental vacancy rates had improved the rental yields for investors.
Westpac senior economist Matthew Hassan says the housing recovery is still “tentative”.
“It’s going to be a different recovery to what we’re used to for housing,” he says. “Our medium-term view is that the housing recovery will be constrained. Households will be reluctant to increase their leverage and that restrains the upturn to [keeping pace with] income growth.”