Alexa

Australian house prices drop record 6.7 percent

Australian house prices drop record 6.7 percent

Australian house prices fell by an unprecedented 6.7 percent in the year ended March 31, official data released yesterday showed, in more evidence of the global financial crisis' impact on the economy.
That was the biggest decline for a single year that the Australian Bureau of Statistics has reported since the government data agency started collecting data in 1986.
Prices declined in every quarter of the year, ending with a 2.2 percent decline in the three months through the end of March, the bureau said. Analysts had expected the decline to flatten out in the quarter.
NAB Capital chief economist Rob Henderson said the decline could be explained partly by delayed effects of historically high interest rates up until September 2008 - with the central bank began aggressively cutting rates to try to stimulate the economy.
"They also reflect the global recession and negative local sentiment as the economic outlook clouded over," Henderson said.
JPMorgan economist Helen Kevans said house prices could be expected to fall at a greater rate - up to 10 percent - before getting better. But Australia's market was likely to stay in better shape than those in the United States and Britain.
She said the economy was likely to remain weak until the end of 2009, causing unemployment to rise to around 7 percent, up from 5.7 percent in March.
"Rising unemployment will be bad for house prices, which we expect to fall on average by 5 percent-10 percent in 2009," she said.
Her prediction received some support Monday from the latest job advertisement survey compiled by the ANZ bank, which showed advertisements in newspapers and online fell by 50 percent in April compared to the same month a year earlier and 7.5 percent from March.