11 July 2012
ABS Housing Finance data out today shows a 7.3 per cent fall in commitments to buy new-built houses in a singe month. This follows a 9.3 per cent fall the month before.
“Established house price are now at such a discount to newly-built that buyers are choosing older houses in better locations,” David Collyer campaign manager for Prosper Australia said today.
“In recent years, construction employed around 11 per cent of the workforce. We expect that to shrink in Melbourne, with serious consequences for employment and aggregate demand.
“Considered alongside the RBA credit aggregates data for May – the equal second weakest housing credit growth in the series’ 35 year history – the ABS data reveals demand for credit is very weak.
“With so little fresh money entering property, house prices have no support and will continue to fall. This is best illustrated in Victoria, where mortgages discharged have equalled mortgages taken out since September 2011 and now decisively exceed them.
“Economically, this is a very, very bad place to be.
Earlier this year, Prosper predicted a 15 to 20 per cent fall in house prices this calendar year. At the halfway point, we regard price movements as entirely in line with this prediction.
* Prosper Australia is conducting a Don’t Buy Now! Public Meeting at Northcote Town Hall 7 pm on 19 July. Come along and meet the young adults who cannot access home ownership and are saving a giant nest egg ready for the day they can. Visit:
Media contact: David Collyer 0413 248 193
About Prosper: Prosper Australia is a tax reform lobby group and think tank that is now 120 years old. It seeks to move the base of government revenues from taxing individuals and enterprise to capturing the economic rents of the natural endowment, notably through Land Value Tax and Mining Tax.