The West Australian capital Perth house price boom has ended and New South Wales capital Sydney house prices have dropped even further as the property downturn continues to bite, with analysts predicting months more pain for homeowners.
House price growth in Perth slowed to just 1.7 per cent in the December quarter, with property prices in the city now growing at the fourth-slowest rate in the country, according to Australian Bureau of Statistics figures.
In Sydney, median house prices fell 1 per cent in the quarter - reversing slight gains made earlier in the year - as the impact of last year's three rate rises was digested by the nation's weakest property market.
Housing Industry Association chief economist Harley Dale said housing affordability in NSW remained the lowest in the country, but flat or falling prices were slowly attracting first-home buyers and investors back into the Sydney market.
Mr Dale said the effect of last year's interest rate rises would continue to dampen house price growth until at least June.
National house price growth slowed to 0.9 per cent in the December quarter, resulting in annual growth of 8.3 per cent.
That slowdown was driven by the cooling Perth market, which had delivered total house price growth of 34.6 per cent in the first three quarters of last year as the state rode the resources boom.
Elsewhere in the country, house price growth remained relatively subdued in the December quarter except in Brisbane and Darwin, where prices grew by a respectable 3 per cent.
"We expect Brisbane will lead the housing recovery over the next two years," BIS Shrapnel senior analyst Jason Anderson said yesterday. "Brisbane is where rental growth has been strongest, it's where pressures are greatest and I think that's showing up in this price growth."
Mr Anderson said Perth prices were likely to fall 1 per cent this year because that market had "overshot" during the boom.
Macquarie Bank head of property Rod Cornish said interest rates were expected to remain on hold this year as inflation pressures eased.
And he predicted the Reserve Bank would probably cut rates early next year in an attempt to stimulate building activity in the floundering NSW and Victorian markets.
Mr Anderson said Sydney would remain a two-tier market, with house prices in the city's struggling outer-western suburbs expected to fall as much as 5 per cent this year, while inner-city areas could show slight growth.
"There's still this tug of war going on between what buyers are asking and what people are prepared to pay," he said.
In a sign of the weakness in Sydney's outer suburban housing market, Stockland - Australia's second-biggest property group - last week revealed only 96 of the 1900 blocks of land it had sold in the past six months were in NSW.
Source: The Australian
