1 September 2011
MELBOURNE:- The RP Data‐Rismark July Hedonic Home Value Index released yesterday confirms house prices are falling at an annualized 9.5 per cent.
“The new downward trend in house prices is firmly established and will proceed rapidly from here,” Prosper Australia Campaign Manager David Collyer said today.
The RP Data index shows the eight capitals overall are down 1.5 per cent QoQ. That is an annualized rate of almost 6 per cent. Meanwhile, the ABS says inflation is running at an annual 3.6 per cent, so the current pulse across the eight capitals is about -9.5 per cent per annum in real terms.
Prosper Australia called the bursting of the bubble on April 15 this year.
“The boosters and spruikers of the property industry have suddenly flipped to a new narrative, that this modest change makes real estate a ‘buyers market’.
“Their claim is misleading and deceptive. They should hang their heads in shame,” Collyer said. “This self-serving argument is an attempt to coerce innocent buyers to commit to a lifetime of debt at the very peak of The Great Australian Land Bubble.
“Prosper sees no reason why young Australians should pay grossly inflated prices for homes just so vendors can crystallize their gains and exit with their wealth intact.
Prosper Australia’s Home Buyers Strike and repeated warning – Don’t Buy Now! – addresses prospective home buyers trying to negotiate the traps and pit-falls on the road to home ownership.
House prices have a very long way to fall to become attractive. House prices at three times a buyer’s income is a neutral market and at 2.5 times is a buyers market. Prosper expects to see these prices in about five or six years.
“A third of adults rent. While not every renter aspires to home ownership, all are excluded by high land prices. This is an abuse of the idea of citizenship in a property-owning democracy and Australia’s profound national commitment to opportunity for all.
“We expect the RBA to cut interest rates firmly in coming months. However, a zero interest rate policy is impossible with Australia’s concurrent mining boom.
“The federal government has no further market interventions available. A fresh first home buyers’ grant would be met by derisive howls from young adults. They have learned such trickery merely inflates prices by at least the size of the grant, and goes straight into the pockets of vendors.
“We take no joy in the widespread economic destruction the bursting of the bubble will bring. The villain in this drama is the tax system, a scheme that advantages land speculation over genuine investment and wage-earning.” ENDS
Media comment: David Collyer firstname.lastname@example.org
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.