Home prices up 0.4% as home sales plummet to 18 month low

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Home prices across Australia remain stagnant, increasing by 0.4 percent in July after falling by 1 percent in June, compounding the lowest new home sales volumes seen in 18 months.

Home prices AustraliaAccording to the August RP Data–Rismark Hedonic Home Value Index data, Australia’s capital city home values regained some of their value lost in the month of July, recording a seasonally-adjusted increase of 0.4 percent (on a raw basis home values were up only 0.1 percent in the month).

The July results follow a 1.0 percent seasonally-adjusted decline in the month of June; the first negative movement in Australian capital city home values in 17 months.

The slow-down in Australia’s housing market had been long-anticipated by RP Data and Rismark and was noted by the Reserve Bank of Australia in its most recent Board Minutes.

According to RP Data’s research director, Tim Lawless, the July index results are further evidence that Australia’s housing market has experienced a controlled soft-landing after a resounding recovery during the course of 2009.

“In the period between end 2008 and March 2010, Australian home values rose by 16.3 percent. Yet monthly growth rates have declined consistently since the start of the year. RP Data and Rismark expect to see the market track sideways over the second half of the year. There is the possibility of modest gains if mortgage rates remain in check and economic conditions continue to improve,” he said.

Yesterday saw the release of the HIA’s New Home Sales Report, which found that new homes sales fell by 7 percent in July 2010, taking new home sales to levels not seen since December 2008.

HIA Chief Economist, Dr Harley Dale demanded the incoming Federal Government take action to rectify the sharp fall in new home sales to protect jobs in the industry.

“There needs to be a re-doubling of efforts to reduce the impact of regulation, development charging, and excessive taxation on the cost of new housing supply. ” Harley Dale said.

Detached house sales fell by 7.3 percent in July 2010, while sales in the multi-unit sector fell by 4.1 percent.