A decline in Australian Bureau of Statistics housing finance figures continues a string of weakening housing updates, according to the Housing Industry Association, the voice of Australia’s residential building industry.
‘Leading housing indicators are deteriorating in 2012, pointing to further weakening in already very soft new home building conditions. New home building, as a bell weather sector of the Australian economy, is clearly signalling weaker growth in 2012,’ said HIA chief economist Harley Dale.
‘Policy makers have misread the Australian economy and action is required now. A 50 basis point cut in interest rates is required on 01 May and the banks need to pass that on that in full,’ he added.
The HIA also believes that the federal government needs to abandon its 2012/13 surplus pledge as it risks doing serious damage to the Australian economy.
‘State as well as federal governments need to look closely at housing policy reform to boost new housing supply and bolster household and business confidence,’ explained Dale.
The total number of seasonally adjusted loans for owner occupiers fell by 2.5% in February 2012, dragged down to an extent by a hefty drop in first home buyer loans in New South Wales.
Loans for the purchase of a new dwelling dropped by 10.4% in February, but loans for construction increased by 3.1%, meaning that total loans for new dwellings eased by 0.6%. Loans for existing dwellings net of refinancing fell by 4.2%.
In February 2012 the seasonally adjusted number of loans for new housing fell by 5.8% in New South Wales, by 1.3% in Victoria, by 2.1% in Western Australia, and by 26.9% in the Northern Territory. There was a rise of 4.9% in Queensland and they were up 2.8% in South Australia, up 18.3% in Tasmania and up 7% in the Australian Capital Territory.
The residential building industry is also being weighed down by excessive and inefficient taxation, the HIA pointed out, with the total tax bill in some states amounting to over 40% of the final price of a new home.
‘Taxes on new housing are a brake on economic activity, and represent a constraint on housing affordability and labour productivity,’ said HIA managing director Shane Goodwin.
A new report by the Centre for International Economics (CIE), commissioned by the HIA, found that new housing is the second most heavily taxed.
‘Stamp duty is particularly inefficient, but it is not alone as an excessive and inefficient tax, which acts as a disincentive to one of the fundamental tenets of Australian life, the provision of shelter,’ explained Goodwin.