house prices overvalued despite growth softening:

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    Aust house prices overvalued despite growth softening: analyst
    AAP News
    9:45:020 12/08/2005
    By Caroline Adam
    SYDNEY, Aug 12 AAP - Australian house prices are still more than
    20 per cent overvalued, despite growth having softened since the
    start of last year.
    National house prices had skyrocketed between the last trough in
    2000 and the end of 2003, but growth had slowed considerably since
    then, JPMorgan economist Jarrod Kerr said.
    "Indeed, for the first time since 1996, real national house
    prices have submerged into the negative," he said.
    "Prices are falling over the year in nominal terms in Sydney,
    Melbourne and Canberra."
    He said JPMorgan estimates showed that national house prices
    were 22 per cent overvalued, even after the significant slowdown in
    "Sydney's overvaluation is the highest of all capital cities and
    above the estimated levels of overvaluation at similar points in
    time where house prices had stalled," he said.
    Sydney was overvalued by 37 per cent, Melbourne by 22 per cent,
    Perth by nine per cent and Brisbane by four per cent.
    Adelaide was neither overvalued nor undervalued.
    Meanwhile, Canberra was undervalued by six per cent, Hobart by
    seven per cent and Darwin by 29 per cent.
    JPMorgan has forecast a 10 per cent correction in national house
    prices by the end of 2005, which Mr Kerr said was modest given the
    overvaluation in the market.
    In its quarterly Statement on Monetary Policy this week the
    Reserve Bank of Australia (RBA) published new data to provide a
    better measure of median house prices.
    The RBA said the data, compiled by Australian Property Monitors,
    confirmed there had been "a marked cooling in nationwide house
    price growth over the past 18 months".
    It said average city-wide prices had fallen or remained
    unchanged in Sydney, Melbourne and Canberra in the 18 months to the
    June quarter, while there had been only modest growth in Brisbane.
    Growth in Adelaide and Perth had also slowed, but in contrast to
    the other capitals, prices had continued to rise at a solid rate.
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