US and Australian Market Trends

Two different banking systems has shown how Australia's housing

 market has been able to weather the financial storm  

The latest figures tracking the performance of the US housing market came out this week,

with the First American Core Logic House Price Index (HPI) release revealing US housing prices

fell 11.5 percent as of March ‘09 compared to a year ago, a slight improvement from an 11.7

percent annual decline as of February. Two trends are becoming evident in the US market: price

declines are slowing in the states that have had the highest declines over the past three years;

however, declines are accelerating in states that have been experiencing only moderate

decreases during that same period. Thirty-three states (out of fifty) have exhibited acceleration

in the rate of price declines in the last three months. Since U.S. home prices peaked in July

2006, national home prices have declined 22.3 percent on a cumulative basis and are currently

down to the lowest price level in more than five years. Australian market values, in comparison,

have been exceptionally resilient. The April figures for the RP Data-Rismark House Value Index

will be released this week. Based on last month’s figures (to March ’09) Australian property

values increased  by 1.6 percent over the first three months of the year. Overall, Australian

dwelling values are just 2.5 percent or $11,800 lower than the February 2008 peak. Clearance

rates in Australia’s auction markets have improved substantially since the start of 2009. In

Melbourne, Australia’s largest auction market, clearance rates were averaging 60% during 2008.

Over the past month clearance rates have been around the 80% mark. In Sydney, auction clearance

rates have moved from a ‘08 average of 40% to consistently achieve 60% or greater since the

first week of February. The total number of weekly listings has remained below the 12 month

average suggesting new stock additions are very controlled and total stock on market has remained

consistent suggesting a healthy rate of absorption. Locally stock levels are very low with many

agents reporting that they are  having difficulty replacing stock. Currently first home buyers are still

snapping up anything that is priced below $300,000. As time gets closer to October 31, it will be

interesting to see how the activity changes as the grant is wound back.