Residential property prices fall in September quarter

House prices in most capital cities have fallen during the September quarter, according to the latest research by Australian Property Monitors (APM).

The largest fall was in Brisbane, down 5.2 per cent during the quarter, followed by Hobart (down 4.3 per cent) and Perth (down 3.4 per cent).

Sydney median house prices dropped by 1.7 per cent while Melbourne prices remained static.

APM senior economist Liam O’Hara said the results during the September quarter showed house prices were easing.

“Downward pressure on prices in the quarter was largely a result of the 7.25 per cent interest rate level before the Reserve Bank’s first rate cut in September,” he said.

“During the year, Sydney witnessed a 3.1 per cent drop in median house prices, which is a saving of $17,000 for buyers and investors when compared to this time last year.”

O’Hara said the lower interest rate and the first home owners’ grant would help make more housing affordable in the next 12 months.

Unit prices in the capital cities also dropped, with the largest fall in Perth, which was down 4.2 per cent during the September quarter.

Sydney unit prices were down 1.1 per cent during the quarter, while in Melbourne they were down 2.3 per cent.

“The outlook for the residential property market will depend on the effect of falling interest rates, a weakening economy and slowing demand for housing credit,” O’Hara said.

“Dramatic reductions in the official interest rate in early October and November will lift confidence and help stabilise property prices in the short term.”

However, he warned if economic growth continued to decline and unemployment continued to rise, prices could fall further.

“Property prices and activity will drop and further official interest rate cuts may be needed,” O’Hara said.

“During the next six months, property prices will continue to flatten and even fall moderately.”