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Australia Home Prices Drop for Second Year as Consumers Cautious

Australian home prices fell for the second-straight year as sluggish consumer sentiment dented the impact of interest rate cuts.

House and apartment prices across the nation’s eight state and territory capitals fell 0.4 percent in the 12 months to Dec. 31, according to the RP Data-Rismark home value index, after a 3.8 percent decline in 2011. Prices are expected to rise in 2013, with increases constrained to levels between inflation and wage growth, RP Data said.

“It is clear that the previous strong value growth conditions to which many home owners became accustomed of recent years are well and truly behind us,” Cameron Kusher, senior research analyst at RP Data, said in the release.

The effect of interest rate reductions to match a half-century low of 3 percent has been dented by weak consumer sentiment and concerns about the global economy. Consumer prices will rise 2 percent to 3 percent in the year to Dec. 31, according to Reserve Bank of Australia forecasts.

Melbourne had the biggest home price declines last year, falling 2.9 percent, the Brisbane-based researcher said in an e-mailed release. Darwin was the best performer, surging 8.9 percent, it said.

Apartment prices in the eight cities rose 0.5 percent in 2012, while values of detached houses fell 0.5 percent, RP Data said.

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