Signs of improvement in Australian housing market

Country:  Australia

1 December 2008

The Australian residential property market reversed the downward trend by recording average price growth of 0.3% in October, after falling for the past six months.

The median price growth recorded may be low, but it is the first two consecutive months of appreciation since the housing downturn began, according to research from RP Data and Rismark International.

"The doom and gloom merchants have misunderstood the fundamentals and the diversity of the Australian residential property market by predicting that Australia was headed for a market-wide implosion in 2008," according to RP Data head of research Tim Lawless.

Australian property values had fallen just 0.8% over the year to October, compared with the share market's (S&P/ASX 200 index) 40.5% drop, Mr Lawless said.

"The Australian property market has moved through the bottom of its cycle," he said yesterday, releasing RP Data-Rismark's latest residential price index to the end of October.

But the company cautions not to expect a quick turnaround and forecast flat housing prices in the first half of next year.

Other commentators are more pessimistic. AMP chief economist Shane Oliver believes Australia's house prices are overvalued and could fall 10-15 per cent next year.

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