Yahoo!7 Finance, On Tuesday 1 November 2011, 17:37 EST
Any recovery in the Australian housing sector won't be happening soon as prices are still falling, economists say.
Capital city house prices fell, on average, by 1.2 per cent in the September quarter, official data showed on Tuesday.
This compared with a downwardly revised 0.5 per cent in the house price index for the June quarter. (More From Yahoo!7 Finance: Countries With The Highest Taxes)
Economists had forecast a fall of 1.5 per cent in the September quarter.
Commsec economist Savanth Sebastian said there was no housing turnaround in sight.
"We wouldn't anticipate that to change any time soon," he said. (More From Yahoo!7 Finance: For Sale: Australia's Most Expensive Properties)
"It does seem the weakness is right across Australia and we think, at the moment, the housing sector is in a period of consolidation."
Mr Sebastian said, before the Reserve Bank of Australia's (RBA's) board meeting on Tuesday, that the weak housing figures added to the argument the RBA should cut the cash rate.
The RBA did cut the cash rate, by 25 basis points, to 4.5 per cent on Tuesday afternoon after its monthly board meeting. (More From Yahoo!7 Finance: Inside The World's First Billion-Dollar Home)
"It does have the impact on consumer confidence. It's just one further aspect, which can lead to a lack of spending in the economy," Mr Sebastian said before the rate cut announcement.
CMC Markets chief market strategist Michael McCarthy said the yearly results were worse than he expected, due mainly to downward revisions in the June quarter figures.
"Some of that softness, particularly on the east coast, that a number of commentators have been pointing to, appears to be showing up in the data," he said. (More From Yahoo!7 Finance: Highest Paying Jobs in Australia)
"Nonetheless, this is nowhere near as dramatic as a lot of commentators are calling for."
He said the data was notoriously volatile and not a key indicator.
Mr McCarthy said there was a mild turnaround in bond prices, with yields falling slightly on the back of the housing data. (More From Yahoo!7 Finance: Top 10 Highest Paid Government Leaders)
Deutsche Bank senior economist Phil O'Donaghoe said he was not surprised by the continuing weakness in house price data.
"Other private sector measures of house prices were pointing to the same sort of outcome this quarter, so we're not especially surprised by this data today," he said.
Meanwhile, a survey of Australia's major residential builders showed a 3.5 per cent fall in the number of new homes sold in September and a 14 per cent decrease over the September quarter. (More From Yahoo!7 Finance: Monster Billionaire Mansions)
Housing Industry of Australia (HIA) acting chief economist Andrew Harvey said, before the RBA decision, the softer figures should prove an impetus for the RBA to cut interest rates.
Detached house sales fell by 3.3 per cent in September for a fall of 15.3 per cent over the September quarter.
