Falling prices 'won't help affordability'
From: AAP
November 3, 2008
A DIVE in house prices is unlikely to improve housing affordability as dire economic conditions discourage building activity, economists say.
The national house price index fell 1.8 per cent in the September quarter, the Australian Bureau of Statistics said today.
That compared with an upwardly revised 0.2 per cent fall in the June quarter.
In the year to September, the house price index increased 2.8 per cent.
Economists had expected a fall of 0.5 per cent for the September quarter and a rise of 4.0 per cent in the year to September.
ICAP senior economist Adam Carr said the fall in house prices would not improve housing affordability as the prospect of lower property price returns discouraged builders from putting up new dwellings, which are needed to alleviate the housing shortage.
"If we don't want growth to collapse in this economy we need housing construction but investment is held up," he said.
"Housing won't be built if house prices are falling."
In the September quarter, Brisbane had the steepest house price decline of 3.3 per cent, followed by Canberra's 2.5 per cent decline.
Annually, Perth had the biggest fall of 4.1 per cent.
Conversely, Adelaide had Australia's highest house price rise of 9.7 per cent in the year to September.
Housing Industry Association data released last week showed new home sales in September had fallen to a decade low.