Natural disasters, including the recent flooding in Queensland, are having a severe impact on the Australian property market with home buyers putting off moving.
The latest figures show that property sales and prices have seen their biggest monthly slide ever as prices continue to fall. The RP Data-Rismark Home Value Index for capital city dwellings dropped 1.6% in January, while regional homes dropped 1.2% in value.
Canberra was hardest hit with prices falling 3.8%, followed by Perth at 2.6% and Brisbane saw values drop 2.3%. The index previously reported a 0.4% capital gain for the month of December, which has been revised slightly to 0.3% with the addition of further sales data.
RP Data research analyst Cameron Kusher said that although market conditions are typically flat in January because of the holiday period, the natural disasters had made it even worse.
'It's the biggest fall in values that we've ever seen on a monthly basis so while we're not pressing the alarm bells yet we will wait and see what the February results actually tell us,' he said.
'We expect it will be revised up slightly, we don't expect the February result to be nearly as bad as January as clearance rates are improving and there are other indicators suggesting a better outlook,' he added.
While the natural disasters occurred in three states, its impact on the property market had spread across the nation, Kusher explained. 'The disasters kept people out of the market, particularly in Brisbane. It has also impacted on potential buyers in other states because they holiday in Queensland or they have family and friends there,' he added.
More broadly, over the 12 months to the end of January, the index reported that home values in Perth had fallen 3.8%, the biggest drop nationwide, followed by Brisbane at 3.7% and Canberra at 0.6%. Darwin was the best year on year market, with a capital gain of 4.7%, followed by Melbourne at 3.6%, Sydney at 2.5%, Hobart at 2.2%, and Adelaide 2%.
Meanwhile, housing affordability slumped 10% during 2010 as a result of four interest rate rises, compounding an already dwindling supply of new homes, according to the Housing Industry Association (HIA).
Its index shows that housing affordability dropped 5.5% in Sydney in the December quarter, followed by a 3.4% decline in Canberra and a 3.4% fall in Adelaide. Affordability improved modestly in Brisbane and Perth, rising 0.5% and 0.1% respectively.
Outside the capital cities, in the non-metropolitan regions of NSW affordability rose 2.8%, followed by a 1.3% increase in Victoria but fell in Tasmania, down 3.8%, and were down 2% in Western Australia.