Sydney home prices tick higher


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Home prices ticked up in October but the Reserve Bank’s surprise rate rise this month could see that growth peter out by the end of the year.

National city home prices increased 0.3 per cent, seasonally adjusted, following a 0.1 per cent rise in September, according to RPData-Rismark.

“Since the market started to cool in June the cumulative decline in dwelling values to the end of October has been less than 1 per cent across the capitals, suggesting a market that is slowing at a controlled pace,” RP Data research director, Tim Lawless, said.

“Of course, the October data doesn’t include any effect from the November interest rate rise, which we expect will have caused conditions to cool further,” he said.

The RBA lifted the cash rate to 4.75 per cent from 4.5 per cent this month, with the big four banks lifting rates considerably more than that – in one case, the Commonwealth, raised its standard variable rate by 45 basis points.

That is expected to weaken buyer appetite for homes in coming weeks.

The national city dwelling price was $460,000 in October, up from $455,000 in September. Home prices in Sydney and Melbourne both rose 0.6 per cent, seasonally adjusted, while they went backwards in Brisbane by 0.2 per cent and Perth by 1.8 per cent.

A surge of new listings in recent weeks is expected to keep a cap on auction clearance rates, which will in turn act as a drag on home-price growth.

Rismark International joint managing director Ben Skilbeck predicted slower home growth through the second half of the year, with prices mostly unchanged.

“We are forecasting some weakness as the market absorbs the near-double rate hike effected in November.”

“Since the RBA is unlikely to lift rates in December, the key swing variable will be the extent to which rates increase further in 2011,” he said.

Momentum in the Australian housing market has switched into low gear in recent months.

Sydney’s auction clearance rate hit 53.4 per cent on Saturday, while in Melbourne it was 56.8 per cent, essentially unchanged from the previous weekend in both cities, according to Fairfax-owned Australia Property Monitors.

The weaker auction clearance rates come amid higher interest rates and a plentiful supply of houses to be listed for sale.

There were 770 homes listed for auction in Sydney, up more than 100 from the previous week. In Melbourne, there were nearly 1100 properties for sale last weekend, up from about 1000 the week before.

czappone@fairfax.com.au

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