From NAB:
The RP Data-Rismark house price index produced a surprisingly positive report for June. House prices rose 1% in June, and were up in all capital cities except Adelaide. The June increase comes after the very disappointing May results (prices down 1.4% on average), so prices were still down 1.2% in the quarter. Nevertheless the June results are a step in the right direction and although we would not get too carried away with one month’s results, it points to some improvement in housing demand following the interest rate cuts in May and June.
The first half of 2012 was always going to be tough for the housing market, with the uncertain economic environment and low consumer confidence impacting on demand. But following the two successive interest rate cuts in May and June (home loan rates have fallen around 100bps since October 2011) the outlook has improved slightly. Prices are still down in annual terms (ranging from -1.4% in Perth to -6.6% in Melbourne, see table below) but there is a better prospect of some stability in house prices in the second half of 2012 following the recent rate cuts and the expectation of a further cut in Q3. At the very least we should see a slower pace of decline in all cities in H2 2012.
The lack of new supply will also support prices in coming months, as the June data points to rising demand at a time when building approvals and dwelling commencements are still trending lower.
