House prices fell for the first time in three years in the June quarter, according to new data from the Australian Bureau of Statistics (ABS), which reveals that they fell 0.3% nationally in the June quarter, with annual growth easing to 8.2%.
Craig James, Chief Equities Economist, CommSec, said that project home prices rose in all capital cities in the June quarter, with Sydney prices increasing at the fastest annual rate in three years.
"With the population growing at the fastest rate in 20 years and the rental market super-tight, the risk is that rate cut speculation could spark a new rush into the housing market. The fear of being left behind, or even worse, shut out, was behind previous surges in house prices," James said.
"Clearly, house prices have slowed markedly over the past six months, but that's hardly a surprise in the wake of sharp rises in mortgage interest rates. But in contrast to the last slowdown in 2005, Australian house prices have been quite resilient.
"When you consider that population is growing at the fastest rate in almost 20 years, building has slowed to a crawl and the vacancy rate is super-tight, it's clear there's no shortage of supportive factors," he continued.
When assessed over the entire country, James said that house prices are in 'Goldilocks' territory - not too hot, not too cold, in fact about right.
"Over the past 20 years, Australian house prices grew on average at 8.2% annually, and that's precisely what they rose by over the past year," he added.
Queensland is the strongest housing market in the nation, with house prices rising at a 14% annual rate, and new building approvals higher than in any other state.
Perth house prices fell 0.9% over the past year, but still remain broadly double the levels of five years ago, according to the ABS.
James believes that a "triple whammy of factors" could send house prices marching higher again, as forecast in Your Investment Property's September issue.
"Not only is the rental market super-tight, but population growth continues to strengthen and speculation has shifted to rate cuts. If rates are cut in coming months, investors could easily swing from cash-based investments and the share market to the property market," James said.
"Those analysts who believe that house prices are set to plunge have to come up with an explanation about where Australia's growing population is going to live."
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