Australian home values fell last month, adding to pressure on the Reserve Bank to slash interest rates to rekindle demand in the sector. Melbourne's values led falls, and are now down 7 per cent from a year earlier.
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Capital city home values fell 0.8 per cent in April, offsetting slight gains in February and March, property analysts RP Data said.
All cities, apart from Canberra, Adelaide and Darwin, experienced price falls.
Sydney was down 0.3 per cent in April, Melbourne's slid 1.7 per cent and Brisbane lost 1.3 per cent.
‘‘On a 12 month basis capital city dwelling values have fallen by 4.5 per cent, with the weak conditions in Melbourne (-7.0 per cent) and Brisbane (-6.4 per cent) dragging the weighted average down,’’ RP Data property analyst Tim Lawless said.
Sydney's home values were down 2.6 per cent, seasonally adjusted, from April last year.
For the year to date, values have fallen across Australia's combined capital cities by 0.7 per cent, seasonally adjusted RP Data said.
The Reserve Bank is widely expected to cut official interest rates today for the first time in 2012 after a series of soft economic figures, including modest inflation for the March quarter. Investors bet there's a one-in-three chance that the central bank will lop a full 50 basis points from its cash rate at today's meeting, which would make it the biggest reduction since the depths of the financial crisis.
Today's weak home values data follow news that new home sales have dropped to their lowest level in 17 years.
The number of contracts signed for new homes fell in March to 5443, down 9.4 per cent from the previous month. Multi-unit sales also fell, down 6.4 per cent.
The combination of falling home values and weak sales will add to calls for the RBA to stimulate the housing market by cutting interest rates by as much as 50 basis points today.
It doesn’t suggest interest rate cuts are much of a panacea for the housing market
The weak numbers will also increase pressure on the Victorian state budget, due out today, as stamp duty revenues shrink.
March price falls
In a separate report out today, official house price figures from the Australian Bureau of Statistics reinforced evidence of the drop in home values.
Australian capital city house prices fell 1.1 per cent in the March quarter, the figures showed, more than twice the 0.5 per cent drop predicted by economists.
Melbourne again featured with one of the bigger falls among the cities, with prices down 2.2 per cent for the quarter and 6.6 per cent from a year earlier.
Sydney posted a 1.8 per cent drop for the March quarter, while house prices in Australia's biggest city slid 4.6 per cent from a year earlier.
The March quarterly drop compares with a revised 0.74 per cent fall in the December quarter.
In the year to March, the house price index fell 4.5 per cent, the ABS reported.
National Australia Bank chief economist Rob Henderson said the ABS data showed successive interest rate cuts in November and December had done little to support house prices.
‘‘Three months after two interest rate cuts, what has happened to house prices? They have fallen,’’ he said.
‘‘So it doesn’t suggest interest rate cuts are much of a panacea for the housing market does it?’’
The sluggish demand is also showing up in the number of houses sold.
Property transaction volumes are now about 31,000 a month compared with sales of 45,000 a month during the more heated market in mid-2009, RP Data said.
“Our estimate of transaction volumes to February suggest that the two interest rate cuts in November and December last year are yet to provide a sustained stimulus to the market,’’ Mr Lawless said.
That, in turn, had a multiplier effect on other parts of the economy, he said.
‘‘Agents, mortgage brokers and banks are at the frontline. The number of new homes selling is very low, housing starts are low and that flows into the sale of whitegoods, building materials and household furnishing,’’ he said.
In April alone, home values rose 1.6 per cent in Darwin, 1.2 per cent in Adelaide and 0.2 per cent in Canberra, RP Data’s figures show.
Hobart values fell the most for the month, down 2.9 per cent, while Perth’s fell 0.4 per cent.
BusinessDay with AAP