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House prices fell in October, for the first time in four months, as the effect of the May and June central bank rate cuts wore off.
The latest RP Rismark Home Values Index, released on Thursday, found that house prices were down one per cent in October, but on a quarterly basis there was a 0.5 per cent rise in prices for the eight capital cities.
ANZ head of property research Paul Braddick said home prices got an initial boost from the May and June rate cuts but then eased in October, which reflected a lack of enthusiasm from buyers.
"As long as lacklustre buyer sentiment continues to hold back potential purchasers, we are unlikely to see any significant, sustained rise in home prices," he said.
"An uncertain economic environment has heightened job security concerns and forecast increases in unemployment in the year ahead will continue to weigh on home purchase decisions.
"However, the October rate cut and prospective further RBA (Reserve Bank of Australia) moves should lift purchase affordability and bolster buyer sentiment."
RP Data research director Tim Lawless said it was unclear whether the October price fall was just a blip on the path to recovery or a sign of further weakness in the housing market.
"Other indicators are suggesting the market has gathered some strength, with auction clearance rates holding firm around the 60 per cent mark across the two major auction markets (Sydney and Melbourne) and owner occupier housing finance numbers showing steady improvements," Mr Lawless said.
"Despite the cash rate (at 3.25 per cent) being only 25 basis points higher than the emergency lows seen in 2009, we are yet to see a real improvement in consumer confidence or housing market transaction volumes."
Perth and Darwin were the only capital cities to record a rise in prices in October, gaining 0.4 per cent and 4.0 per cent, respectively.
Hobart had the heaviest fall, losing 4.5 per cent, and Adelaide was the next, with a 2.4 per cent fall.
Sydney and Brisbane both recorded 0.9 per cent price falls in the month and Melbourne fell 1.1 per cent.
Based on information provided by and with the permission of the Western Australian Land Information Authority (2013) trading as Landgate.