Homes selling for less

IT'S still cheaper for Australians to buy homes in capital cities today than it was a year ago.

House prices

HOUSE prices across the capital cities rose in the three months to June, but it is still cheaper for most Australians to buy a home today than it was a year ago.

A national survey of home prices released yesterday indicated the median capital city house price lifted 1.4 per cent in the June quarter, although it remained 3.1 per cent below its level a year ago.

Meanwhile, the median price of apartments and other residential dwellings rose 0.4 per cent over the quarter, the Bendigo Bank/Real Estate Institute of Australia Real Estate Market Facts report showed.

But those prices were still 0.4 per cent lower for the year.

Bendigo and Adelaide Bank executive Dennis Bice said the report suggested the housing market may be gaining momentum.

"People have been putting the big decisions such as up-sizing or down-sizing their housing on hold for some time now, but there is evidence to suggest that activity in the property market is beginning to build again,'' he said.

Hobart recorded the biggest increase over the quarter, with prices up 4.8 per cent, while Canberra was the worst, with a 5 per cent slump. The report also found loans to first-home buyers rose by 5.9 per cent in the quarter.

Australian Bureau of Statistics data released on Monday showed home loan approvals fell 1 per cent
in July, reversing a 1.3 per cent rise in the June quarter.

Meanwhile, separate ABS figures showed the housing construction industry remained stuck in the doldrums despite a slight improvement in the June quarter.

Australian builders broke ground on 34,116 new dwellings including houses, apartments and townhouses in the three months to June, a 4.6 per cent rise on the previous quarter.

However, commencements on new houses dropped for the 10th consecutive quarter to their lowest level since 2001, ABS data released yesterday showed.

That was offset only by a 19 per cent jump in the more volatile residential non-houses sub-sector.

Master Builders Australia chief economist Peter Jones said builders were struggling, and further interest rate cuts were needed to reverse the sectors' flagging fortunes.

The Reserve Bank of Australia cut the cash rate by half a percentage point in May, followed by a quarter of a percentage point cut in June to 3.5 per cent.

Mr Jones called on governments to provide more support to the industry.

"Urgent reform is required to address supply bottlenecks otherwise a strong industry response to meet underlying demand cannot eventuate,'' he said.