It's a flat market but yields are on the up

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Property values across the nation’s capital cities saw a flat month in March, according to recently released RP Data-Rismark Home Value Index results.

Capital city dwelling values fell by 0.2% in seasonally adjusted terms during the month of March, contributing to a negative quarterly seasonally adjusted growth rate of -2.1%. 

March’s result was broadly in line with what has been a flat growth performance over the last 12 months across our capital cities of -0.6%.

RP Data research director Tim Lawless noted that the market won’t start to bounce back until the demand for property starts to match up to supply.

“Clearance rates are bouncing around the low 50% mark each week, the number of homes being advertised for sale is almost 30% higher than at the same time last year,and sellers are being forced to adjust down their price expectations,” he said.

“Before there is any real upwards pressure on home values there will need to be some absorption of effective supply and a return of sustained buyer confidence to the market.”

Sydney saw the best seasonally adjusted growth performance of the state capitals, with a quarterly fall of -1.1%, followed by Canberra (-1.3%), Hobart (-1.4%), Melbourne (-1.5%) and Adelaide (-1.6%).

A flood-ravaged Brisbane saw the biggest quarterly fall of -4.6%, followed by Perth (-3.4%) and Darwin (-2.5%).

“Unsurprisingly, the flooding that has occurred within South East Queensland has likely compounded Brisbane’s weak market conditions,” said Lawless. “Brisbane values are down 6.8% over the year to March 2011.”

The good news for investors is that the capital city rents have risen 4.6% over the last six months.

“In contrast to the fall in home values, gross rental yields have been improving, with apartments and houses now delivering a gross return of 4.9% and 4.2%, respectively, in March 2011 according to RP Data-Rismark’s estimates,” said Lawless.

The best yields can be found in Darwin, with houses averaging 5.4% and units 5.7%, which is closely followed by Hobart (5.4% for both houses and units), and by Brisbane (4.5% and 5.2%).

Are capital cities still a safe bet for investors? Will the capital city market bounce back this year? Join the debate at www.yourinvestmentpropertymag.com.au/forum

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