Home Prices Rise in June Quarter
Less than a week after releasing a report that painted a gloomy picture of the residential construction industry, the Housing Industry Association (HIA) has announced that the housing market is, in fact, quite strong. In the words of HIA Senior Economist Andrew Harvey, “The data will be yet another blow to the housing market doomsayers that, against all available evidence, continue to portend a collapse in Australia’s housing market.”
Harvey pointed to a 0.5% rise in average prices for established houses on a nationwide basis and to the fact that “in the three months to June prices rose in five of Australia’s capital cities" as indications of a healthy market.
Results were not consistent throughout the nation. Prices for both new houses and established houses rose in Sydney, Brisbane, Adelaide, Perth and Darwin, but fell in Melbourne, Hobart and Canberra. The Sydney market for new houses was strongest, with prices rising 1.1%. For established houses, Darwin, with a rise of 5.1%, was the strongest market by far. Its closest competitor, Sydney, saw an increase of 1.4%.
Prices for new houses fared worst in Hobart, where they dropped 1.7%. In Canberra, prices for established houses fell 1.3%, making it the weakest of the markets studied.
“The fundamentals of Australia’s housing market remain very strong - rents continue to grow at a rate well above headline inflation, rental vacancy rates are tight, and Australia’s unemployment rate remains the envy of the developed world,” Harvey said.
At the same time, the HIA report includes a reminder that prices “remain down 2.1% on prices of one year ago.” That reminder is more in keeping with the HIA’s report of 26 July, when it described “persistent and widespread home building weakness.”
The July report based its conclusion on the increase in the availability of skilled labour, a sign that residential construction activity was lagging. To reach that conclusion, the HIA surveys its members across 13 trades to determine their availability. According to those responses, trades for the June 2012 quarter were in a state of “moderate oversupply,” with a value of .20, while the HIA Trade Prices Index fell 0.7% for the quarter. On an annual basis, trade prices rose 0.1% from June 2011 to June 2012.
Harley Dale, HIA Chief Economist, noted that trade availability was at a high point. “A synchronised decline in new home building and renovations activity in 2012, which sees the former sector back in recession, is reflected in the highest availability of skilled labour reported since the HIA trades survey began in 2002,” he said.