AU: Residential Property Prices

Mon Mar 19 19:30:00 CDT 2018

Actual Previous
Q/Q percent change 1.0% -0.2%
Yr/Yr. percent change 5.0% 8.3%

Australia's residential property price index rose 1.0 percent on the quarter in the three months to December, rebounding from a decline of 0.2 percent in the three months to September. Year-on-year growth in the index, however, slowed from 8.3 percent to 5.0 percent, the slowest pace since the three months to September 2016.

The headline index is a weighted average of house prices for the capital cities of Australia's eight states and territories, with prices varying markedly among these cities. Prices fell for a second consecutive quarter in Sydney, the largest city, down 0.1 percent on the quarter after fall of 1.4 percent previously, with year-on-year growth slowing from 9.4 percent to 3.8 percent. Price also fell on the quarter for the fourteenth consecutive quarter in Darwin, a city impacted by the slowdown in mining investment seen in recent years.

In contrast, house prices in the second largest city, Melbourne, rose 2.6 percent on the quarter after an increase of 1.1 percent previously, with the year-on-year increase still strong at 10.2 percent, down from 13.2 percent in the three months to September. Prices also rose on the quarter for the first time in a year in Perth, another city with a high exposure to the mining sector, with solid price gains also recorded in the other cities.

Today's data suggests that the slowdown in house prices late last year was mainly driven by Sydney, with officials from the statistics bureau citing the impact of tighter regulatory conditions that have curbed lending to property investors. Officials at the Reserve Bank of Australia, however, remain concerned that household debt levels are still too high and may reduce the scope for consumer spending to strengthen.

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.