The Sydney property market is at the forefront of a nation-wide drop in house prices that will ensure interest rates remain on hold well into the new year. Property prices in Sydney have slid 2.3 per cent over the past three months and are now almost 10 per cent down on where they were at the start of last year. Just days after the international Organisation for Economic Co-operation and Development (OECD) warned Australia's property slowdown would continue at least another 12 months, the Australian Bureau of Statistics said price falls were now hitting Melbourne, Brisbane, Canberra and Hobart. Prices were down one per cent for the quarter over all capital cities, and up just one per cent over the full year. Only hefty price increases in Perth, up 3.1 per cent in the last quarter and 17.7 per cent over the past year, and Darwin, up 7.7 per cent for the quarter and 21.9 per cent for the year, have stopped overall capital city prices from plummeting. The price figures came out as new building figures confirmed the weakness of the new housing market. The total number of dwelling units approved in October remained steady at just over 12,000. But the number of private homes approved during the month fell 0.2 per cent to 8,223, the second lowest monthly number since May 2001. Private home approvals have dropped 4.9 per cent over the past year. The number of private sector other dwellings dropped 1.5 per cent to 3,351 in the September quarter, the second lowest number since February 2002. Private sector other dwellings were down 10.8 per cent over the full year. The value of total building approvals slumped 8.4 per cent to $4.6 billion. AMP Capital Investors chief economist Shane Oliver said the mining boom was keeping the prices of houses afloat in Darwin and Perth. Elsewhere, reality had caught up and it could be years before there were real increases in house prices in cities such as Sydney and Melbourne. "We're probably not going to see a real big fall in prices, but it could be five to 10 years before prices start to really increase again," Mr Oliver told AAP. The Reserve Bank board, with a new member in Woolworths chief Roger Corbett and without Adelaide businessman Robert Gerard, meets next week for the last time this year. Master Builders Australia chief economist Peter Jones said it was clear the board should leave rates on hold for the time being. "This data suggests any stabilisation in the housing market may still be some way off, until a recovery in demand for houses can gain some traction and the correction in the high density apartment market runs its course," he said. "In this context we urge the Reserve Bank to keep interest rates unchanged." CommSec chief equities economist Craig James said it was becoming increasingly unclear whether the bank's next move would be a rate hike, as most analysts have been tipping, or a cut. "With house prices barely moving, new house approvals at four-year lows, and consumer spending still soggy, the Reserve Bank is solidly on the interest rate sidelines," he said. "The next move in interest rates won't occur until well into 2006, and at this early stage, there is little point speculating which way rates are likely to move next." Source From: AAP