Prosper Australia, the organisation behind the Home Buyer’s Strike, has today announced the “Great Australian Land Bubble” has popped. According to Prosper, the statement has been made on the back of extremely poor housing finance figures released by the ABS.
Figures from SQM Research show residential properties advertised for sale is up 3.8% for the month. There is now 356,000 residential properties for sale, a 47.5 percent increase over the last 12 months.
It is unlikely we will see a new first home buyers grant/boost this year to save the market from inevitable collapse.
In reference to the First Home Buyers Boost introduced during the GFC, the Prosper press release said “Rudd was determined to see the bubble did not burst on his watch”. Treasury documents show the scheme was designed to encourage young buyers who had already been saving for a home to bring forward their purchase and “prevent the collapse of the housing market”. Louis Christopher from SQM Research said last year that “The scheme was all about saving the market from a big correction, It was never about improving affordability for first-home buyers.”
Earlier this year, a Real Estate Lobby group lashed out at the Gillard Government for ignoring them. After the election last year, Julia Gillard abolished the position of a dedicated housing minister, and according to the lobby group, they have not been asked for their expertise or research since. Some speculate, the distancing of the government from the Real Estate Industry and the removal of a single responsible minister is in preparation for the inevitable.
Both State and Federal governments face tough budgets. At a State level, the low turnover of properties is effecting stamp duty, and as consumers claw back spending, GST revenue is also contracting. At a Federal level, the Treasury has warned the government of a $4.5 billion dollar shortfall from personal and company tax returns, much of it from a shortfall of Capital Gains Tax (CGT). During the election last year, a promise was made by the Gillard government to return the budget to surplus in 2012-13. Treasurer Wayne Swan indicates this will still happen, suggesting this will be a tough budget and one absent of any stimulus to pump up the ailing housing market.
After a bold announcement by Prosper that the Real Estate Bubble has burst, we make the prediction that Australia will be in a fresh financial crisis within 3 to 9 months.
Despite Rudd saying on October the 15th 2008, “As Prime Minister I will not sit idly by and watch Australian households suffer the worst effects of a global crisis we did not create,” Australian Household’s had an unsustainable debt bubble when the GFC hit. By using a series of very generous stimulus packages, we were able to delay the debt driven meltdown to the extent that most Australian’s believed we dodged the GFC all together.
Today, credit is no longer expanding. Households are scared to borrow and/or spend. While Retailers are having a tough time now, we believe when the housing bubble starts to collapse and with the negative wealth effect there will, unfortunately, be much more pain inflicted on the economy.
» POP! The Real Estate Bubble Has Burst – Propser, April 12th 2011.
» Swan primes voters for tough budget – The Sydney Morning Herald, April 10th 2011.
» Capital gains tax receipt fallout trims Budget outlook – News Limited, April 12th 2011.
» Property sector turns on PM – The Australian, 31st January 2011.