AU: Residential Property Prices

Mon Dec 11 18:30:00 CST 2017

Actual Previous
Q/Q percent change -0.2% 1.9%
Yr/Yr. percent change 8.3% 10.2%

Australia's residential property price index fell 0.2 percent on the quarter in the three months to September, down sharply from an increase of 1.9 percent in the three months to June. This is the first quarterly decline in the index since the start of 2016. Year-on-year growth in the index slowed from 10.2 percent to 8.3 percent.

The headline index is a weighted average of house prices for the capital cities of Australia's eight states and territories. Continuing the recent trend, house prices again fell in Perth and Darwin, two cities with larger exposure to the mining sector, but prices also fell in Sydney, Australia's largest city, for the first time in six quarters, declining by 1.4 percent on the quarter. This was offset by an increase of 1.1 percent in Melbourne, Australia's second largest city.

Today's data are broadly consistent with the assessment of the housing market published in the statement released after the Reserve Bank of Australia' s policy meeting held earlier this month. Officials noted then that recent prudential supervision measures aimed at curbing growth in housing lending had resulted in tighter credit standards for borrowers, and also pointed to signs that conditions in Sydney had eased. With home loan data released last week also indicating more subdued conditions in the housing market, today's data will likely reinforce the case for policy rates to be kept on hold in the near-term.

Residential Property Prices provide estimates of changes in housing prices in each of the eight capital cities of Australia along with a weighted average of the eight.

Home values affect much in the economy, especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. Rising prices increase consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.