House prices have stabilised over the last two months of 2011 (November / December). Over 2011 prices declined by about 3.5%, with Sydney being the best market being largely flat and Brisbane / Melbourne the worst at an over 6% decline. Localised regions may vary in performance and certainly the Gold Coast in QLD and Central Coast in NSW have experienced larger falls. When rental returns are added, the total return remains slightly positive.
Even though this was a poor performance by historic standards, when compared to the stock market that declined by 15%, it shows the relative stability of property as an asset class.
Despite the RBA holding rates steady, the general outlook for house prices in 2012 is positive with commentary suggesting flat to 5% growth. This outlook is supported by continued strong rental growth, continued shortage of new housing and recent interest rate reductions.
Source: ABS & PCL