Minister wants to flood land market

New Housing Minister Bill Marmion has shocked the property market by saying he wants to flood WA with housing lots to cut home prices.

In a speech to Parliament that has set alarm bells ringing throughout the real estate industry, Mr Marmion said the Barnett Government’s aim was to “bring house prices down”.

“The Department of Land is looking at this issue very closely,” he said.

“It owns land and it is looking at its land stocks and will release as much land as possible.

“That will reduce the pressure on housing supplies. Our aim is to bring the median house price down and to have it lower than the median house price in other States.”

Mr Marmion, who took over the job last month after Troy Buswell was sacked, said the only thing the Government could do to achieve its aim was “release more land and houses”. He refused to elaborate on his comments yesterday.

March quarter figures from RP Data put the median house price in Perth at $480,000, equal to Darwin, but behind Sydney ($500,000) and nation-leading Canberra ($510,800).

Hobart had the cheapest prices in Australia at $323,750.

The State Government established an Office of Land and Housing Supply in Thursday’s Budget and is reviewing available government land which Premier Colin Barnett said would “achieve a comprehensive and co-ordinated approach to housing affordability issues”.

Shadow housing minister Mark McGowan warned the policy could result in houses being worth less than what people paid for them.

“If people go into negative equity with their house, that’s the worst possible outcome,” he said.

Real Estate Institute of WA chief executive Anne Arnold said Australians stored their wealth in the family home and it would be “politically unwise for any government to go down that path”.

But the plan won support from developer Nigel Satterley, who said land needed to become more affordable.

But he said the policy would not cut the price of existing houses.

“We’re on the cusp of a block shortage and whatever the Government can do should be encouraged,” Mr Satterley said.

Analysts at RP Data found in April that houses in Perth’s cheapest suburbs cost at least $60,000 more than those in the most affordable areas in the other major Australian cities.

Hillman was named the cheapest suburb in Perth, with a median house price of $280,000 – higher than the cheapest suburb in Adelaide ($200,000), Brisbane ($205,000), Melbourne ($218,000) and Sydney ($219,000).

Perth had less than 10 per cent of its 259 suburbs with a median house price under $350,000, compared with more than 20 per cent in all other big cities.

Blocks of land in Perth were the most expensive in Australia, according to a recent analysis by RP Data and the Housing Industry Association, with a single square metre of “prime earth” now costing an average of $521.

Source  :  www.thewest.com.au

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Stimulus, rates ‘spur first home buyers’

First home buyers now comprise a record proportion of the residential housing market after responding to low interest rates and the government’s revamped assistance package, economists say.

First home buyers made up 27.5 per cent of all home loans in March, a record since the Australian Bureau of Statistics (ABS) began the data series in 1991, and compared with 26.5 per cent of the total market in February.

The ABS data also showed that the housing market has recovered to its February 2008 levels, when interest rates were still being raised by the Reserve Bank of Australia (RBA) before a series of monthly cuts since September to a 49-year low last month.

The number of home loans for owner-occupied housing jumped to a 13-month high of 59,793 in March.

The 4.9 per cent rise in March was even sunnier than economists’ forecasts of a 4.5 per cent increase.

“The housing industry is one of the more interest rate sensitive sectors and its a positive that the response has so far been rapid,” ICAP senior economist Adam Carr said.

“The result clearly ads weight to the argument that the Reserve Bank of Australia has done enough.

“It’s lost on many that other central banks around the world are cutting aggressively to counteract a breakdown in the transmission mechanism. This isn’t the case here.”

Between September and March, the central bank cut official interest rates by 400 basis points to 3.25 per cent in a bid to stimulate a flagging economy.

In early April, the RBA cut the cash rate by a further 25 basis points to a 49-year low of three per cent.

The ABS data found that total housing finance by value rose by 6.7 per cent in March, seasonally adjusted, to $20.688 billion, while loans to investors rose by 4.7 per cent from a year earlier.

“It’s particularly positive that investors are coming back into the market from low levels,” Mr Carr said.

Housing construction rose 13.9 per cent, or 5,565, year on year.

Lending for new dwellings climbed 2,610, or 8.8 per cent, while lending to buy established homes climbed 51,619, or 3.8 per cent, since March last year.

JP Morgan economist Helen Kevans said the boost to the federal government’s first home buyers grant has lifted demand for housing, particularly for new homes.

“As expected, demand for home loans again was underpinned by first home buyers, owing to the attractive grant and improved housing affordability, stemming from lower interest rates and falling house prices,” Ms Kevans said.

“The bigger grant for new building largely explains the solid 8.8 per cent rise in loans issued for the purchase of new dwellings in March.

“In coming months, we believe grants will continue to underpin demand for home loans, particularly during the June quarter given expectations that the expanded grant will end on June 30, as originally planned,” she said.

The government’s first $10.4 billion stimulus package, unveiled in October, doubled the first home buyer grant for established homes to $14,000, and tripled it to $21,000 for newly-constructed dwellings.

There is speculation the grant for brand new housing will be maintained in this year’s budget while the subsidy increase for established homes is scrapped.

Ms Kevans expects the RBA to cut the cash rate by 50 basis points to 2.5 per cent in the second half of 2009.

www.thewest.com.au

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