Sydney - Monday - February 2: (RWE Aust Business News) -...

Sydney - Monday - February 2: (RWE Aust Business News) -
Australian house prices fell 0.8%q/q in 4Q (J.P.Morgan and consensus
-1.0%), after slumping a revised 2.4% in 3Q (previously -1.8%).
J.P.Morgan economist, Helen Kevans says one reason that the rate
of decline in nationwide house prices eased in the final quarter could be
that demand from first home buyers picked up following the doubling of
the first home buyers grant in October to A$14,000.
First home buyers accounted for 23.6% of all home loans in
November, well above the 19.5% recorded in October, and the highest level
since early 2002.
This may have provided some support for house prices late in
2008.
Differing rates of population growth, housing supply, and
affordability mean that the fall in house prices was not uniform across
the nation.
Prices fell in most capital cities, with the largest declines
recorded in Melbourne (-1.7%), Brisbane (-1.2%), and Perth (-0.9%).
Prices in Sydney (-0.3%) and Hobart (-1.0%) also were down. House prices
rose in Adelaide (+0.3%), Canberra (+0.7%) and Darwin (+1.6%).
Our forecast is for house prices to fall 10% in 2009, faring much
better than most other countries, says Kevans.
Larger falls in house prices may materialize, although the acute
shortage of new homes and accelerating population growth (mainly on the
back of higher skilled migration) will provide support for house prices
in some cities.
Another reason that Australia should not experience such a severe
property market downturn is that most mortgages here are variable (around
80% of all loans), which means that home owners will benefit quickly from
falling official interest rates.
We expect the RBA to deliver another 100bp cut to the cash rate
tomorrow, taking the official cash rate to 3.25%, and a terminal cash
rate of 2.75% to be reached in March.
If the RBA delivers on our expectations, it will have delivered
450bp worth of rate cuts since last September.