The rapid growth recorded during 2009 is finally slowing with RP Data figures showing Australian capital cities notching their second consecutive month of low single digit annualised growth.
According to RP Data, capital city property values rose by just 0.6% during May while the rest of the state markets fell in values.
RP Data’s director of research Tim Lawless said RP Data-Rismark’s May index results reinforce mounting speculation that the Australian real estate market is transitioning towards a lower and more sustainable growth path, which will be encouraging for the RBA.
“This second consecutive month of single-digit annualised gains sends a signal that the double-digit growth rates recorded since January 2009 are behind us. The signposts have been in the market for several months now with lower auction clearance rates, fewer housing finance commitments, and weakening consumer confidence,” he said.
The latest data also showed a widening disconnect between the capital city and non-capital city markets.
During the12 months to May 2010, home values in Australia’s capital cities climbed by around 12%. In contrast, non-capital city regions grew by just 5.8%.
“This is simply a function of demand and supply,” said Christopher Joye, managing director, Rismark International. “The demand for homes is stronger in the major conurbations whereas the supply of new dwellings has been weak. In comparison, the smaller metro and regional markets have relatively less demand combined with much more elastic housing supply.”