Above is a short segment that aired last night on the ABC’s 7pm national news and The Business discussing the Australian housing market. The segment featured comments from yours truly, along with Harley Dale from the Housing Industry Association and Craig Delaney from Long Island Homes.
The transcript is below and the original HD video can be viewed here.
TICKY FULLERTON, PRESENTER: Housing activity remains stuck in the doldrums.
The latest figures show national prices falling in April and new home sales remaining near record lows.
The industry is calling on the Federal Government to use the budget to revive activity.
But economists warn there could be more trouble ahead, with property investors racking up $13 billion a year in negative gearing losses.
Neal Woolrich reports.
NEAL WOOLRICH, REPORTER: As the mining boom fades, the Reserve Bank and Federal Government have been counting on the housing market to pick up some of the slack. But the most recent signs suggest the property market is staggering rather than surging.
LEITH VAN ONSELEN, CHIEF ECONOMIST, MACROBUSINESS.COM.AU: I think it’ll pick up some slack, but I don’t think it’ll be anywhere near enough. The main problem in Australia is that land prices on those new homes is simply far too high and it is pricing out a lot of potential buyers.
NEAL WOOLRICH: The national average home price fell half a per cent in April and annual growth remains below trend at just 2.7 per cent. And while new home sales rose 4 per cent in March, building activity is 20 per cent below the long-term average.
HARLEY DALE, CHIEF ECONOMIST, HOUSING INDUSTRY ASSOC.: In net terms, we’re not actually seeing growth in new home sales that is commensurate with a sustained recovery and new home building.
NEAL WOOLRICH: In part, it’s because first home buyers are deserting the market. Four years ago they accounted for nearly a third of all housing loans. Today it’s around one in six after the federal and state governments pared back first home buyer incentives.
CRAIG DELANEY, MD, LONG ISLAND HOMES: When you wind back the grant, you start to penalise builders trying to put house and land packages together, you take momentum out of the marketplace and that erodes consumer confidence.
NEAL WOOLRICH: Property developer Craig Delaney says conditions are as bad as he’s seen, but a recovery could happen later this year.
CRAIG DELANEY: If banks also loosen up their lending criteria as well and valuers actually understand that capital growth is achievable again in the marketplace, the building blocks will start to fall into place and that’s what we need to see.
NEAL WOOLRICH: But housing investors could be the next to desert the market. Tax Office statistics show that losses from negative gearing topped $13 billion in the 2011 financial year, and with little growth in house prices since then, negative gearing is becoming less attractive.
LEITH VAN ONSELEN: And the risk is that if there is a large uptick in unemployment, as the mining boom unwinds there might be some pressure to sell.
HARLEY DALE: I think if we were going to find a problem of widespread concern on the part of investors leading to wanting to rid themselves of housing assets, it’s likely something that we would have seen emerge in 2011 and 2012.
NEAL WOOLRICH: Harley Dale says tax and regulation is holding back new home building and he wants Wayne Swan to use the federal budget in a fortnight to help boost activity.
HARLEY DALE: If you were to reduce red tape regulation around new housing, for example, by 1 per cent, that’s going to generate over a billion dollars worth of additional economic activity in the economy in any given year.
LEITH VAN ONSELEN: I certainly wouldn’t like to see Wayne Swan give money directly to buyers ’cause that would be likely to bid up house prices. But there certainly is scope for Wayne Swan to provide funding to the states in order to boost their infrastructure spend.
NEAL WOOLRICH: But with money tight at the federal level, the chances of another round of stimulus for the housing industry looks slim at best.
