RCR Finance Bulletin # 7 - 4th April, 2008

Property Market Update

The latest RP Data-Rismark Hedonic Index results show that Australian residential property prices rose on average by 1.97% in the 3 months to end February 2008 despite 3 recent interest rate hikes.

During the same period (i.e., over the Feb quarter), the ASX200 and the All Ordinaries fell by 13.5% and 12.9%, respectively.

The continued and resilient rise in Australian residential property prices contrasted some recent media reports that suggested (incorrectly) prices had fallen in February.

• Adelaide (up 5.36%)
• Melbourne (up 4.03%)
• Brisbane (up 3.84%)
• Canberra (up 3.49%)
• Darwin (up 6.22%)

The above cities all registered strong increases in property prices during the Feb quarter.

Sydney (down 0.41%) and Perth (up 0.03%) were the two key laggards.

While the Feb index results were surprisingly resilient, Rismark expects the first half of 2008 to see more moderate capital gains--relative to the circa 13% growth in 2007--with the potential for significant volatility around RBA rate changes.

Interestingly, two major forecasters, BIS Shrapnel and CommSec, last week published projections of strong house price growth in 2008 and beyond.