In the weeks since the Albanese government delivered it’s latest federal budget, whatever pretense of a free market that existed surrounding the issue of housing prices has been gradually evaporating.
Where once there were claims that the impact of negative gearing and the capital gains tax discount were minimal, and that Australian housing was a free market, there is now a sea of criticism for the Albanese government for falling housing prices in an increasingly large proportion of the country.
It has certainly brought into focus the priorities of various figures, as they make it clear that they do not want housing prices to fall.
In a heated on air exchange between Shadow Attorney General Michaelia Cash and Housing Minister Clare O’Neil on Channel 7’s Sunrise, Cash accused the government of crashing the housing market.
“You have actually managed to crash the housing market.”
“They (first home buyers) relied on your promises, they stretched themselves, they bought a home, and because of your policies those homes are now worth less than what they bought them for.” Cash said.
In contrasting Cash’ claim of a crashed housing market against the latest figures from property data provider Cotality, they do not stack up.
In Brisbane, Adelaide, Perth and at a regional aggregate level prices are at their all time peak.
At a national aggregate level they are down by 0.7% and in the capitals down by 1.3%.
The largest drop seen in any major market thus far is Melbourne, which is down 4.0% from its all time high.
Not much of a crash….
Meanwhile, if we look in on how far New Zealand housing prices have fallen, it would be fair to say that Auckland and Wellington have experienced a crash.
Yet the magnitude of the falls seen there are an order of magnitude greater than what has been seen so far in Australia.
The Takeaway
It’s entirely possible and arguably plausible that housing prices in Australia may yet crash if the wrong set of circumstances were to unfold on the road ahead, but we are still a long way away from that now.
If we look back on the performance of the Sydney market in particular which has historically been one of the most volatile markets, there were months in 2022 when housing prices fell over 2% in a single month, as the chart below from Antipodean Macro illustrates.
Source: Antipodean Macro
At this stage even the worst performing market is still quite distant from particular achievement.
There is a grain of truth in what Cash claimed, that government in Australia plays an outsized role in how the path of housing prices unfolds.
We’ll just have to see what tools they have at their disposal next time the inclination to save the market from greater price falls again emerges.
