Australian house prices fell by a record annual amount in the three months through March as the nation’s first recession since 1991 and surging unemployment sapped demand for property.
An index measuring the weighted average of prices for established houses in the eight capital cities slumped 6.7 percent from a year earlier, after dropping a revised 3.9 percent in the fourth quarter, the Australian Bureau of Statistics said in Sydney yesterday. It was the biggest decline since the bureau began recording prices in 1986.
To prevent Australia’s property market from suffering a US-style slump as the nation enters its first recession in two decades, central bank Governor Glenn Stevens cut borrowing costs last month to a 49-year low of 3 percent. The government also tried to stoke demand for homes by increasing grants in October for first-time buyers to as much as A$21,000 (US$15,500).
“It’s a sizeable drop and isn’t surprising,” said Matt Robinson, an economist at Moody’s Economy.com in Sydney. “We had a period where people just didn’t know how bad things were going to get, and no amount of monetary policy stimulus and first-home-owners grants were going to encourage them to buy.”
Prices fell 2.2 percent from the fourth quarter, when they declined a revised 1.2 percent. The median estimate of 15 economists surveyed by Bloomberg News was for no change. Economists also forecast a 3.9 percent annual decrease.
While annual declines in Australian house prices have accelerated since the December quarter, falls in the UK have slowed. The average cost of a home in England and Wales fell 0.3 percent last month, the smallest drop in 12 months, Hometrack Ltd said on Monday last week. Prices fell 10.1 percent from a year earlier, after sliding an annual 10.3 percent in March.
The drop in home prices in the 20 largest cities in the US slowed in February for the first time since 2007. The S&P/Case-Shiller index’s 18.6 percent decrease compared with a record 19 percent decline the month before.
Australia’s biggest quarterly drop was in Perth, where prices fell 10.1 percent in the first quarter from a year earlier. Prices fell 7.3 percent in Sydney, 6.7 percent in Melbourne, 6.3 percent in Brisbane, 5.1 percent in Canberra and 1.9 percent in Adelaide. Darwin rose 10.8 percent and Hobart increased 0.6 percent.
“Our forecast is for house prices to fall 10 percent from peak to trough” in Australia, said Helen Kevans, an economist at JPMorgan Chase & Co in Sydney.
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