House prices fall in major Australian cities

Economic uncertainty and a desire for homeowners to pay off their mortgage debts have resulted in a slight fall in property prices in Australia over the last year.

The most recent data from the RP Data-Rismark Hedonic home value index shows that there has been a 2.7 per cent fall in house prices in Australia’s state capitals in the first five months of 2011.

Average house price in Australian cities falls 2.3 per cent over last year

The report found that in the year to May 2011, prices in Australia’s major cities fell by 2.3 per cent.  RP Data research director Tim Lawless attributed the fall in property values to worries about the country’s economy and a desire to save rather than spend money.

Mr Lawless said: “Despite the low rate of unemployment and the strength of the resources sector, it is clear that the average Australian is content to pay-down debt and wait for some economic certainty to return.”

In addition, the strength of the Australian dollar has made it much more expensive for foreigners to buy property in Australia, particularly at the luxury end of the market.

The Sydney Morning Herald also reports that property sales volumes were about a quarter below the five-year average.

Brisbane and Perth see biggest price falls

The biggest house price falls were reported in Perth and Brisbane where the median house price fell by 7.5 per cent and 5.9 per cent respectively.

The SMH reports that ‘Mr Lawless said house prices in Perth had been falling since late 2007 due to a lack of buyer demand, despite strong population growth and low unemployment in the West Australian capital.’

The report revealed that Sydney was the only market to have recorded a rise in property values over the year to May 2011, with house prices in the New South Wales city up one per cent.