Rate rises stall property market, data
April 30, 2008 - 6:43AM
The highest mortgage rates in almost 12 years are beginning to pare back house and home unit prices in Sydney but Australia's biggest city remains the nation's most expensive for residential property.
Sydney apartment prices dropped by 2.5 per cent in the three months to March, data from Australian Property Monitors showed.
And while average house prices in the harbour city fell by 0.4 per cent over the same period, to $550,890, they remain the most expensive in Australia.
During the quarter back-to-back monthly rate rises by the Reserve Bank of Australia (RBA) pushed mortgage rates to their highest levels since 1996.
Australian Property Monitors general manager Michael McNamara said higher interest rates would hurt the national property market in 2008.
"The March quarter results strongly suggest the property market is slowing significantly and is likely to be sluggish throughout 2008," he said.
"No doubt, rapidly rising interest rates are biting hard.
"These figures demonstrate the acute sensitivity of the Australian property market to rapidly increasing mortgage repayments."
Hobart house prices suffered the biggest quarterly fall, of 3.4 per cent to $268,773, further cementing its place as the cheapest capital city market.
House prices also fell in Canberra and Perth in the three months to March.
Unit prices posted their biggest quarterly fall in Canberra, of 3.2 per cent to $346,231.
Apartment prices were also cheaper in Brisbane and flat in Melbourne.
Darwin defied the trend where unit prices grew by 11.4 per cent to $323,051 in the March quarter.
On an annual basis, only Hobart unit prices recorded a decline, with the 1.3 per cent fall making its average asking price of $218,038 Australia's cheapest capital city buy.
In the year to March, Adelaide enjoyed the strongest national gains for both house and unit prices.
Apartments in the South Australian capital climbed by 20.5 per cent to $264,503, while house prices were up 19.6 per cent to $411,885.
The RBA's March rate rise took the official cash rate to a near 12-year high of 7.25 per cent.
Mr McNamara said higher interest rates would increase housing supply.
"Softer market conditions are expected to persist throughout 2008 - fewer buyers and more sellers are beginning to create a glut of unsold inventories in the property market," he said.
"Consequently, this has resulted in purchasers having more choices but vendors more headaches."
© 2008 AAP
