Australia | Mar 19 2009
By Chris Shaw
Fundamentals may suggest the Australian housing market should be seeing increased activity given the shortfall in supply relative to ever-growing demand, but the latest dwelling commencement data show there has not yet been any pick-up. Housing starts fell a further 9.9% in the December quarter.
This translates into a year-on-year decline of 19.5% and on Westpac’s numbers puts housing starts an an annual pace of just over 130,000. This compares to market estimates of demand of as much as 180,000 annually and the bank’s own forecast of more than 170,000.
The implication of the latest data in the bank’s view is the underlying housing shortage is set to worsen further in 2009, even as the latest housing finance approval figures suggest some increase in activity levels in coming months.
At the same time the boost in grants and other consessions for first home buyers has had some impact in terms of house prices as the bank notes Residex data indicate some firming in housing markets early in the year, though the results have been mixed across segments and States.
Prices nationally fell 0.1% in February compared to a 0.7% decline in January, so the bank notes taking the data together shows a moderation in the rate of price falls. Some of the decline could also be put down to seasonal factors as January-February is a traditionally a quiet time in property markets.
Sydney and Adelaide were the best performed last month and managed to deliver average price gains of 0.6%, while prices in Melbourne and Darwin were flat. Brisbane prices fell by 0.5%. The most severe falls were recorded in Perth, where prices declined by 1.7% to be down 7.7% compared to levels at the start of 2008.
The increase in first home buyer activity means unit prices have generally performed better than houses, in annual terms being down just 0.1% compared to the 1.8% fall in house prices. At the same time as auction clearance rates have remained fairly steady Westpac notes this is on the back of lower volumes, indicating more properties are being settled via private treaty at present.
