Australia has experienced nine quarters of falling land sales volumes with the last five quarters flatlining forty per cent below long term averages. Current high land prices have no visible means of support and must fall, Prosper warns.
The data was released today by the Housing Industry Association, emphasising the recent shocking five quarter falls to bolster their case for large interest rate cuts, fiscal expansion and weak regulation.
“If the government took the HIA’s advice, it would prop up current prices and enforce the personal nightmare of committing 40 per cent of dual incomes to housing costs to merely get on the first rung of ownership,” Prosper Australia Campaign Manager David Collyer said today.
“We have all privately done our sums. Citizens see buying at current prices as financial suicide and banks will only lend to ideal customers because the prospects for repayment are so poor.
“Anyone who buys on those terms faces a lifetime of poverty or bankruptcy,” Collyer warned. “Debts that big are absolutely crippling.
“The HIA’s figures are up until end December 2011. Auction volumes since then have been very weak so the trend they identify has continued and consolidated.
“The real problem is property prices broke from their affordability anchor a decade ago when housing flipped from providing shelter into a Ponzi scheme.
“The house price to rent ratio is now so compressed private renting, set at the threshold of pain, is a relative bargain. Further, the price to wages ratio is now between six and nine time earnings, depending on assumptions. House prices are typically 2.5 to 3.5 times wages.
“Prosper has been warning potential homebuyers to stay out of the market for just over a year now. The big falls in prices we have been predicting are now a certainty.
“Don’t Buy Now!” Collyer concluded.
Media Contact: 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.