Victoria's housing market slides as sales drop off
With a steep decline in the number of building project approvals in the state of Victoria – and a surprise rise in the number of families falling into arrears with their home loans – it is unsurprising that house sales in the region have taken a hit.
Just last week Fitch Ratings' Dinkum Index showed that an estimated 14,000 Victorian families are now behind with their mortgage repayments, compared to just 11,000 who were in a similar situation last year.
What's more, Australian Bureau of Statistics figures have shown that construction activity across Australia dropped by 2.5 per cent in June. In Victoria things were worse with private sector house building falling by 3.3 per cent.
This has undoubtedly had an impact upon the sale of new homes, which, in turn, may continue to have an unsettling effect on construction starts.
Surprisingly Victorian sales performed better than in most other parts of the country, slipping by just 4.6 per cent in July.
In South Australia sales dipped by 8.9 per cent and things were worse in Western Australia, which saw property transactions drop off by 14.4 per cent.
Only Queensland managed to buck the national decline, seeing sales leap by an impressive 11 per cent.
Following the disappointing figures, economists immediately turned to talk of further rate cuts by the Reserve Bank of Australia to further stimulate growth.
Speaking to the Herald Sun, CommSec chief economist Craig James said: "The question is whether it will take more rate cuts to spur housing demand and construction or whether federal, state and territory governments need to take greater action in inducing lenders to lend and developers to start new projects."
The mortgage market is also subdued at the moment, with the Housing Industry Association urging the government to step in and help the sector return to growth as soon as is physically possible – something that Aussies who are already on the property ladder would no doubt appreciate.