Eight months into Australia’s housing recession and there is no signs of letting up, not that we would expect any let up unless the government decided to intervene. According to the RP Data-Riskmark Hedonic Index released today, nationally house prices fell a seasonally adjusted 0.4 percent in the month of August. The mining state capital lead the falls, with Perth house prices plunging 2.0 percent for the month.
Year on Year, Perth is now down 7.1 percent, Brisbane 6.1 percent, Hobart 5.3 percent, Adelaide 4.9 percent, Melbourne 4.3 percent, Darwin 3.4 percent and Canberra 2.1 percent. Sydney is the only capital to record a positive result year on year, nudging just 0.3 percent higher. The falls are now bigger and longer than first experienced during the Global Financial Crisis.
There has been a swag of housing news out this week, mostly negative. On Tuesday, research from RateCity showed there were 40,000 fewer first home buyers (or 31 percent) in the property market in the last 12 months compared to the 12 months earlier. This has seen mortgage lending fall $11 billion dollars.
With Perth prices falling 7.1 percent over the last 12 months, Wednesday’s RP Data annual equity report show about 1 in 20 Perth home owners (or 4.9 percent) had negative equity in the June Quarter – that is, their homes are now worth less than the mortgage. The other ‘mining’ state is in a worse position with 6.3 percent of Queensland owners now having negative equity. Across the country, 3.7 percent of homes are now under water.
Meanwhile, credit rating agency Moody’s has shown the number of mortgage delinquencies are trending up. Mortgage holders more than 90 days behind has increased from 1.36 percent in March to a 10 year high of 1.67 percent in June. According to Moody’s there was a spike in 2008 (prior to the RBA dropping interest rates and the government introducing the First Home Owners Boost) but current delinquencies are now above that spike.
Following the same mining boom theme, Arthur Karabatsos a senior analyst at Moody’s said in the Sydney Morning Herald, the two biggest declines in mortgage performance were in mining boom states Western Australia and Queensland. ”What I’m saying is, if you’re in mining, you’re sweet, if you’re not, you’re screwed,” ”What is happening is that not everyone is employed by the mines. Not every labourer is getting $100,000 a year, which you are if you’re in the mines.”
» Australia First-Time Home Buyers Down 31% In 2011 – RateCity – The Wall Street Journal, 27th September 2011.
» Homes in five WA regions among nation’s worst rate of negative equity – Domain, 29th September 2011.
» What boom? Defaults rise in two-speed economy – The Sydney Morning Herald, 29th September 2011.