RP Data – Rismark Property Value Index Release

Released 31 December 2008

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Strategically located affordable properties likely to be the best performers during 2009

Released today, the RP Data-Rismark Property Values Indices for houses and units reveals that the Australian property market continued to show real resilience to the global credit crisis and slowing economic growth.

Looking into 2009, the report suggests the greatest growth will come from the affordable segments.

RP Data National Research Director Tim Lawless said recent improvements in market conditions have coincided with the affordability improvements brought about by the decision by the Reserve Bank of Australia (RBA) to cut official interest rates by 1.25 per cent in September and October collectively.  This was further complemented by the Government’s announcement that first home buyer incentives would be increased.

“The interest rate cut in November and then again in December will also provide further support to the market with mortgage rates now falling by 30 per cent to reach around 6.7 per cent,” Mr Lawless said.

Based on the findings in the latest RP Data-Rismark National Property Value Indices, in the 12 months to end October 2008, Australian property values had only declined by -1.2 percent.  This is despite mortgage rates peaking at 9.6 per cent in August and the benchmark share market measure, the S&P/ASX 200 Index, falling by around 40.5 per cent over the same period.

According to Chris Joye, Managing Director of Rismark International, the worst period for Australian property values was in the second quarter of 2008 when prices fell by -1.9 per cent.

“This is when the RBA’s rate hikes took effect and consumer sentiment plunged. In the third quarter of 2008, Australian property values fell slightly by -0.7 per cent. The latest October and November sales data suggests that house prices in the final quarter for 2008 will be broadly stable,” he said.

Other indicators are also pointing towards an improving property market.  Indicative of this it the recently released Westpac-Melbourne Institute ‘Time to Buy a Dwelling Index’ shows confidence in residential market conditions increased by 39.4 per cent in December from its September levels which were 21.2 per cent up on the June level.

Mr Joye said, “Assuming most of these rate cuts are passed on by the banks, variable rate borrowers should see their interest rates drop to around 5 to 5.6 per cent respectively - this will provide further dramatic improvements to affordability.”

In 2009, Mr Lawless believes the affordable segments of the property market will offer the best opportunities for capital growth. 

“This will be somewhat of a turnaround for the property market where over the last four years; it has been the affluent properties which have generally provided the best capital growth.”

“Market activity is already showing signs of increasing at the lower end of the pricing scale,” he said.

The latest housing finance data from the ABS shows that first home buyers now represent 22 per cent of all market transactions in the residential property sector. This is expected to increase during the first quarter of 2009.  

Looking ahead into 2009, Mr Lawless is encouraging buyers to target ‘strategically affordable’ properties - these are homes with a reasonable price tag that are well serviced by public transport, arterial roads and the necessary amenities such as shopping, schools and health care facilities.

[Important Note: Due to the intervention of the Christmas public holiday period the November RP Data-Rismark Index results use only a very small sample and are not at this juncture considered to be reliable. Full index results for both November and December will be released at the end of January.]

Ends.

NOTE:

*RP Data and Rismark recommends that caution be used when interpreting property indices results as these results can
vary depending on the methodology used and sample size.

In all RP Data and Rismark published indices, methodology is clearly indicated. More information on the RP Data‐Rismark indices can be found here: http://www.rpdata.net.au/indices/

For media enquiries contact:

Mitch Koper, National Communications Manager, RP Data Limited – 0417 771 778 or mitch.koper@rpdata.com