Rate cuts by the Reserve Bank of Australia (RBA) in November and December 2011 has done nothing to restore confidence to the housing market with the official Australian Bureau of Statistics (ABS) House Price Indexes released today showing house prices in Australia continue to fall, clocking up five consecutive quarterly price declines. In the March quarter, the weighted average of established house prices in Australia’s eight capital cities fell 1.1 percent and for the twelve months to March, prices have fallen 4.5 percent.
After a bad CPI figure last week, the RBA has slashed the official cash rate today by 50 basis points to 3.75%. Even if the majority of Australian banks choose to pass the cut onto mortgage holders, this cut, like cuts in November and December is expected to provide little to no support to Australia’s housing market buckling under the pressure of high household debt. Just yesterday, the RBA released housing credit statistics showing housing credit growth is at the lowest rate since records started 35 years ago. With housing credit growth this low, Australia’s housing bubble could be on borrowed time.
» 6416.0 – House Price Indexes: Eight Capital Cities, Mar 2012, Australian Bureau of Statistics – 1st May 2012.
» Australian House Prices down 10% from Peak – Steve Keen’s Debtwatch, 1st May 2012.
» Confidence the missing ingredient – The Sydney Morning Herald, 1st May 2012.
Looks like it’s really happening, lack of employment security, increased job losses, personal bankrupcies, more repossesions, lowering of interest rates, negative sentiment in everyday purchasing/borrowing, retail taking big profit hits, cost of living increases out of whack relative to incomes, etc, etc…All these ingredients point to a slide in house prices. No one in their right mind is about to take on debt in order to buy a depeciating asset.
I really feel for those who are over committed as they are going to well and truely wake up to the reality of their poor decision making skills. Housing should never be used as a get rich quick scheme, all it’s done is create a false economy and now we are all going to suffer the consequences. A recession bigger than the late 80’s early 90’s is on it’s way to our shores and the government has run out of money to provide any stimulus bail outs….this time is for real!
Hold on to your hats everyone, a massive storm is brewing and it’s going to leave a huge mess to clean up! Lets hope humans will learn from their mistakes and never allow greed to be the driver of the markets ever again.
We need to create a world where any decent hard working person can afford a roof over their heads, not just the one’s playing the situation like they are in the high rollers room at the casino.
I want future generations to have opportunities to live a great life and prosper. Infact, we all should strive to create a Country like that, it’s certainly not the one that we have now. It’s all about the haves and have nots and the gap is getting wider….
Aussie battler, the very things humans do learn from the past is how to do it all over again. Whatever that may be.
I’ll drink to that… I just hope it’s quick, and not the long drawn out slow deflation we’re witnessing in the UK thanks to QE. I have a feeling though that whoever’s in power, ‘Cankles’ Gillard or ‘Mad Monk’ Abbott, they will print money to keep the property market afloat and do their stupidest to delay the inevitable.
Can’t help wondering what Gillard and Swan will do when Spain and Italy go under? Will it be ground hog day all over again?
I truly do not think that you realise the effects that you have on readers of your web site with your wild and inaccurate predictions.
“Sceptic”, care to outline and correct what ‘wild and inaccurate predictions’ you’re referring to?
BotRot, yes that is true, history has a habit of repeating itself over and over, due to the fact that most humans are generally ruled by emotions, particularly the two big ones Fear & Greed. It’s a shame that more people don’t use their rational/logical/thinking side of the brain when making decisions. Oh the psychology of it all ????
@ Rupert
Any future GovCo will run the printing press …..
– Inflate away the debts incurred over the past decade
– Raise rates
– Devalue $AUD
– Push everyone back toward tangible assets (eg: property)
– Run deficits yet do nothing about Negative Gearing until the black hole threatens to swallow us all, then tinker around the edges
@Sceptic
‘eh???? what, adding a contrarian view to the spruikers and mainstream media is wild and inaccurate???
I know… of course, *Australia is different to the rest of the world*
hang on a minute… how many 1000s of Australian workers have been made redundant or sacked across various industries since the start of this year? And that’s just what has been publicised in the mainstream media…
taking all opinions from both sides with a “grain a salt”, as well as what facts one can discern from the myths… I know which opinion / ‘side’ I’m more comfortable believing in…
@Sceptic – I truly do not think you realise the effects that you have on the gullible and the blind.
Your spruiking is now becoming boring to say the least and I don’t know why you bother. EVERY economist and banker in the world knows we are buggered and there has to be massive change NOW. You, my friend, are in cloud cuckoo land.