House Prices in Decline

John Symond, managing director of Aussie Home Loans, predicted that real estate prices in NSW and Victoria would fall by between five per cent and 10 per cent. Symond advised owners of investment properties making plans to sell to do so now. Symond also warned that first-home buyers who had borrowed almost the full value of their property were vulnerable to defaulting on their loans if interest rates rise next year, as some forecasters predict.

Perth Property Prices Up

Data published by Australian Property Monitors suggests that nationwide, average house prices remain fairly stable. The APM composition adjusted measure quoted by the RBA shows that Australia wide, prices fell by 0.8 per cent in the September 2005 quarter, but increased by 0.5 per cent over the year to September. Separate data compiled by Residex and quoted by the RBA show a similar trend. APM found that the median house price in Sydney dropped by 1.5 per cent over the September quarter and fell by 4.3 per cent over 12 months. House prices in Sydney are down by 8.9 per cent from the peak recorded in the March 2004 quarter, according to APM.
House prices are also in decline in Canberra (down by two per cent over the last quarter). However, house prices increased by more than two per cent in Perth in the last quarter, with prices for flats jumping by six per cent.

Home Loan Loss Doubles

The size of the average home loan loss suffered by banks - based on claims paid by lenders mortgage insurance company PMI in Australia and New Zealand - doubled to $44,000 in the nine months to September 2005, up from $22,000 in the nine months to September 2004. The incidence of loans in default is no worse than reported by PMI in recent quarters, with the ratio steady at a tiny 0.13 per cent of the almost one million home loans on which PMI provides mortgage insurance. And the ratio of loans in default to claims paid on such loans is also trivial, with fewer than five per cent of loans in default – all of 56 individual loans – leading to claims being paid.