In the lead up to the official price update for January at the end of the week, CoreLogic data shows Sydney house prices have fallen 9.5 per cent in the 12 months up to January 27.
Melbourne’s house prices have fallen 8.2 per cent. In contrast, Brisbane and Adelaide’s house prices were flat over the year.
Another indication of the momentum that is gathering in the housing downturn is the growing discount between the listing and final selling price.
CoreLogic data this week shows the average discounting in Sydney is between 8.8 to 8.9 per cent whereas Melbourne sellers are accepting a 7.3 to 8.6 per cent discount for their properties. A 5 per cent discount was the norm during the housing boom.
Option for federal intervention
Falling prices and slowing demand would further curtail housing supply and investments, likely to shave off about 0.5 percentage points in GDP growth, Capital Economics’ Marcel Thieliant said in a note on Monday.
The only saving grace would be a fiscal move by the federal government to support the housing market such as through an increase in the first home buyer’s grant as seen in 2008, he said.
In 2008, the tripling in the First Home Owner Grant from $7000 to $21,000 boosted home sales. The impact of the grant increase was particularly positive then as the market was already recovering.
However, a new grant this time might not be as successful, Mr Thieliant warned.
“The key point though is that additional support for first-time home buyers would probably come too late to prevent a slump in dwellings investment,” he said.
By Su-Lin Tan
source : Financial Review – afr.com