'Sentiment hurting housing market'

HOME prices will continue to weaken - but only because of subdued sentiment by buyers rather than fundamental problems in the market, according to ANZ Bank.

HOME prices will continue to weaken - but only because of subdued sentiment by buyers rather than fundamental problems in the market, according to a report on the health of the sector.

ANZ analysis suggests that home prices should continue to ''drift sideways to slightly lower through 2012'' as buyers' attitudes towards housing remain cautious in the year ahead.

''Economic fundamentals suggest this weaker momentum is being driven mainly by a shift in market sentiment rather than any significant forced liquidation of housing due to financial stress,'' according to ANZ senior economist David Cannington.

The housing market received a boost in November and December after the Reserve Bank cut interest rates twice. Yet the central bank lowered rates in response to the slowdown in borrowing along with increased worries about the health of the global economy, stemming from European debt crisis.

The report comes after median capital city home prices lost 3.7 per cent in the 11 months to November, according to home value tracking group RP Data-Rismark.

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Originally published as 'Sentiment hurting housing market'