House prices fell by a modest 0.8% in the December quarter, with those in all capital cities except Adelaide and Darwin lower than a year ago, according to the latest data from the Australian Bureau of Statistics.
Melbourne recorded the biggest drop with a fall of 1.7% compared to the previous quarter. Brisbane's red-hot housing market also appears to have cooled with prices dropping by 1.2%. Sydney's fell by a slight 0.3% while Hobart's tumbled by 1%. In contrast, house prices in Darwin were still strong, racking up a 1.6% increase over the same period, while Canberra added 0.7% and Adelaide, 0.3%.
Savanth Sebastian, economist with CommSec said that while house prices eased over the December quarter, it's important to note that the falls have been modest.
"It's 12 years since house prices across Australian capital cities have gone backwards," he stated. "The fall over the past year was only a meagre 3.3% - and a far cry from the 10-20% fall observed across Europe and the US. It points out clearly the substantial difference in the fundamentals across the globe.
"For budding homebuyers, the latest result will only enhance the already heady cocktail of positive influences," he went on, "as the cheaper prices will help boost affordability. Combine that with the First Home Owner Grant and interest rates at around 45-year lows and housing demand is likely to notice a significant improvement over 2009.
"Softer house prices and the expectation that interest rates will reach their lowest level in four decades should help lead to a revival in home-buying."