According to property researchers RP Data and Rismark International, the supply and demand imbalance in the Australian property market has “placed a floor under housing prices”.
The RP Data/Rismark International national end of month property indices report shows a resilient property market, with national dwelling values remaining positive over the 12 months to August 2008. The three months to August 2008 show a decline in property values of 0.96 per cent.
Lawless said the figures challenge the claims “that Australia’s property market is headed for a crash”.
RP Data said “with population growth projected to remain high and interest rates falling, the demand/supply imbalance is expected to protect the market from any major falls in property values”. Rismark International’s Dr Mathew Hardman said while unemployment is rising, it is not a major factor driving property prices. Hardman argues that affordability, excess demand and market momentum are far more significant.
Hardman said unless unemployment grows to 6 or 7 per cent in the coming years, “excess demand will eventually outweigh affordability constraints and begin to push property markets upwards again, probably by the second half of 2009”. Hardman said the “squeeze” in the more affluent markets as a result of share market and financial turbulence has all but wiped out the ‘two-tiered’ market seen previously, with market movements now similar between metro areas and the ‘mortgage belts’.
The only capital city to record a material decline in property values was Perth, where markets fell by 5.69 per cent over the August 2008 period. But RP Data national research director Tim Lawless said this loss must be placed in the context of 13.9 per cent annual increases over the past five years.