“Australia’s housing markets have cooled off significantly since mid-2010, as higher interest rates have combined with a wind-down in first home buyer activity and ongoing consumer caution. The official ABS series shows house prices rose 0.5% in the second half of 2010 after a 5.3% rise in the first half. However, our preferred price measures – from RP Data-Rismark – show moderate price ‘slippage’ in the second half of the year with a dip of 0.9% overall. The same source shows a further 0.9% fall in prices in January. However, this estimate is unreliable due to very low transaction activity in the month as the usual January low season was compounded by severe disruptions due to flooding in Qld, and parts of NSW and Victoria. We will need to see Feb-March price data at least before we make a judgement on whether there has been a significant further weakening. However, other market gauges less affected by the floods suggest downside risks may be limited.”
