House prices fall to record low across Australian capital cities

According to the latest RP Data home value index, Melbourne residential property prices have now fallen 4.6 per cent in the past three months and a staggering 8.4 per cent during the past year, with the latest median price of just $490,000.

Melbourne was the worst performer in the country during May. Nationally, prices fell 1.4 per cent across all capital city homes.

"It is clear that the market is becoming increasingly price point driven,'' RPData analyst Tim Lawless said.

The market for units is holding up better than for detached houses, Mr Lawless said.

"Much of the weakness is confined to the detached housing market rather than apartments,'' he said.

"Unit values have been much more resilient to value falls compared to houses.''

Nationally unit prices increased one per cent during May while houses fell 1.8 per cent.

Melbourne was the worst performing city, with residential property values falling 2.7 per cent last month and more than 8 per cent over the year.
Sydney, which has proven resilient to the market downturn, also posted a decline. In May, the city’s home values were down 1.2 per cent, resulting in a 3.6 per cent drop over the year.
The Brisbane market is showing signs of improving after two years of lacklustre values. Until recently the river city’s home prices were falling most across Australian capital cities but last month they dipped just 0.3 per cent.
Adelaide bucked the trend and outperformed all other capitals with 1.2 per cent rise in May.
Perth had a decline of 1.7 per cent, Darwin 2.4, Canberra 1.5 and Hobart 1.2.
The falls defy interest rate cuts last month and November last year as the RBA moves to put the accelerator on the economy.
RP Data's research director Tim Lawless said the market had not responded at all to the rate cuts.
Much of the weakness in real estate values was in detached housing rather than apartments, he said
“It is clear that the market is becoming increasingly price-point driven with stronger performances across more affordable markets,” Mr Lawless said.
"Unit values across the combined capitals increased in May and are up by 1.3 per cent over the first five months of the year, the data shows."
Mr Lawless expects the market to remain soft overall until consumer confidence improves.
Rismark managing director Ben Skilbeck says a positive to take away from the soft housing market is that housing affordability is showing a marked improvement.
“The combination of interest rate reductions, declining home values and disposable income growth has significantly improved affordability,” Mr Skilbeck said.
“Since dwelling values peaked in November 2010, they are down by 7.6 per cent, the RBA cash rate has fallen to 3.75 per cent and disposable income per household has increased by more than 5 per cent.”
Weak consumer sentiment remains the main barrier to the recovery in dwelling values, he said.
Another hurdle for the property market is the large number of properties currently being advertised for sale.
Based on RP Data estimates, there were approximately 308,500 homes advertised for sale across Australia