Annual value of residential property transactions at decade low

The total value of homes bought and sold during the 2010/11 year represents the largest annual fall in more than a decade.

Recent RP Data figures show the value of residential property sales for the last financial year declined nationally by 18.2%. RP Data analyst Cameron Kusher said the total value of dwelling transactions was the lowest over a financial year since 2008/09.

Kusher said the decline in value goes hand in hand with a decline in the volume of transactions, and is indicative of low levels of activity in the Australian housing market.

“For the 10-year analysis, the correlation between the two is 95.2%, and shouldn’t come as a surprise because sales volumes are currently sitting at a similar level to what was recorded during the depths of the financial crisis. It is no wonder that many property professionals are experiencing financial challenges,” he commented.

Queensland had the most significant value decline of any part of Australia, falling by 27.5%. It was followed by WA at 22.6%. The only state to see positive results was South Australia, which recorded a 1.3% rise.

Historically speaking, significant declines in sales and purchase volumes and transaction values are usually accompanied by a drop in home values. This time however home values only dropped modestly by 2.1%.

“State and local governments are heavily reliant on property transactions as a source of revenue. Stamp duty, council rates and land tax are calculated off either the unimproved value of the land or the value of the transaction. With the total value of sales down 18.2% over the 2010/11 financial year, there is going to be a substantial hole in state and local government budgets,” Kusher remarked.

In contrast to this, the number of new home loans and value of new home loans taken out during the month of August has shown a slight increase. This is due to many of the applications actually being refinances of existing home loans.

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