The ACT has the lowest rate of negative equity in the country and almost half of all Canberra households are now worth more than double the amount paid for them, a new report says.
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RP Data's annual equity report, published today, found that 45.1 per cent of homes across the country were now worth more than double the amount the householder paid for them, while 3.7 per cent were worth less.
RP Data national research director Tim Lawless estimated Australia's residential housing market was now worth $4.56 trillion - or almost four times the $1.3 trillion value of the Australian equities market.
"Strong value growth in property over recent years has been the catalyst for most regions enjoying quite strong levels of equity," Mr Lawless said.
The report said the median length of ownership in Canberra was 6.9 years and the median change in equity was $223,570 over that period. This was a 75.2 per cent increase.
"In terms of value growth, houses have outperformed units. Houses are typically owned for 7.3 years compared to units which have been held for a shorter 5.8 years. The typical value improvement for houses (95.2 per cent, $277,257), has been superior to units (56.3 per cent, $155,738),'' the report said.
Canberra had the lowest rate of negative equity in the country, but not every home was worth more than the owner paid.
"Just 1 per cent of properties or one in every 100 properties [are] in this position. Canberra has recorded consistent growth in property values during recent years and is yet to record any substantial decline which is resulting in a stronger equity position than all other areas across the country,'' the report said.
"Across the country just 3.7 per cent of home owners are in a position where the original purchase price of their home is lower than the current value of their home, however there are regions around Australian where weak housing markets have created higher rates of negative equity.''
The report said that 45.7 per cent of Canberra homes were now worth at least double what their owners paid, compared with 45.1 per cent nationally. Melbourne, at 55.1 per cent, had the highest proportion at this level of equity.
The report also showed that 2.8 per cent of homes were now worth up to 10 per cent more (compared with 6.2 per cent nationally), 20.3 per cent were worth 25-50 per cent more (16.2 per cent nationally) and 17.5 per cent were worth 50-100 per cent more (14.7 per cent nationally).
The report said that homeowners who bought since 2008 were at the greatest risk of negative equity.
"In addition, these homeowners will typically have paid down less of their debt so falling asset values would be of greater concern. On the other hand, the lower level of equity for these buyers would indicate that they are less likely to have leveraged up on re-investments so as long as they are diligent in paying back their mortgage (and extra where possible) they should be okay,'' it said.
A separate report from the National Australia Bank found house prices fell for the second consecutive quarter and were expected to keep dropping.
The bank's property index dropped 14 points in the September quarter, on top of a 5-point fall in the June quarter.
Dead cat bounce
Meanwhile, a new Housing Industry Association report found a slight rise in the number of new homes sold in August, of 1.1 per cent, after declines of 8 per cent in July and 8.7 per cent in June.
Despite the increase, association chief economist Harley Dale said housing conditions remained very soft.
"There is unwillingness on the part of households to commit given the uncertain domestic and global economic conditions which currently prevail, and that is understandable. That's where interest rate cuts and fiscal stimulus can play an important role in boosting new housing supply in a very competitive market, which in turn would have a positive multiplier effect in bolstering the wider domestic economy," he said.
Detached house sales increased by 1.5 per cent in August, while sales of multi-units fell by 2.2 per cent.
CommSec chief economist Craig James said the increase was from a very low base - a 10.5-year low.
"Apologies to the cat lovers but - as they say on financial markets - the lift on new home sales is akin to a dead-cat bounce,'' he said.
"Sales plunged over June and July and effectively the August result shows activity consolidating near the lowest levels in a decade. Certainly the result won't silence those believing that the Reserve Bank will cut rates over the next few months."