First home buyer outlook improves as prices decline in Dec

Australian house prices declined in December, giving some hope to first home buyers about the outlook for more affordable home prices in the year ahead.

The RP Data-Rismark capital city home-value index declined 0.2% for the month of December, with Sydney the only capital to escape a decline in prices.

Capital city house prices fell 3.6% in 2011, with Brisbane the hardest hit, seeing prices down 6.8% last year and 0.6% for December.

First home buyers looking to enter the market have seen this as good news, although the deterioration in house prices is a growing concern for Australia's four major banks who together hold more than 80% of mortgages.

Property experts are hoping that the Reserve Bank of Australia will undertake further interest-rate cuts in 2012 to prevent any further falls in prices. The RBA next meets to consider interest rates on 7th Feb.

"There is no doubt that additional interest-rate relief in 2012 would afford a very welcome cushion to the housing market," said Tim Lawless, head of research at RP Data.

More than 90% of Australian mortgages are set at a variable rate, and interest-rate cuts typically serve as a boost to the property market.

What’s interesting is that even after the RBA cut rates in December, just the second interest rate reduction since early 2009, prices still fell broadly in the month.

Read more here.

Where do you think prices are headed for first home buyers in 2012?