Australia’s long-awaited housing crash has hit hard.
The Reserve Bank says housing demand has declined by more than 30 per cent in five months, the biggest fall since the global financial crisis.
It’s been the biggest monthly decline in almost a decade.
The housing boom has been the main driver of the economy since the end of the mining boom in the early 2000s.
It’s been particularly pronounced since the financial crisis and the global recession, when demand fell and prices surged.
“The downturn has been one of the most intense in Australian history,” RBA governor Glenn Stevens said at the Reserve Bank’s quarterly meeting in Sydney.
The ABS has found that while prices have risen since the housing crash, people in the median house are now paying twice as much in rent as they were before the crisis.”
Australia is experiencing a real housing affordability crisis.”
The ABS has found that while prices have risen since the housing crash, people in the median house are now paying twice as much in rent as they were before the crisis.
Rental vacancy is now at a 10-year low, while the number of renters has doubled in five years, with a record high 2.2 million people now renting.
The government has been cracking down on the property market, introducing stamp duty and stamp-substituting schemes.
But housing affordability is a serious problem that will not be solved overnight, and it is also the main factor driving the property price boom, and the collapse in property values.
The RBA said it expected house prices to fall again this year and the recovery from the housing boom will depend on the ability of the Australian economy to maintain strong employment growth.
The bank also warned that the “dire situation for Australia’s economy” will be exacerbated by rising unemployment.
It is forecast that unemployment will increase by over 3 per cent this year, and then increase by at least 2.6 per cent by the end.
The Australian Bureau of Statistics is forecasting the economy will shrink by 2.5 per cent next year.
“Australia’s economy is not strong enough to sustain growth in the long-term and the current downturn is further eroding confidence in the Australian job market,” RBC’s Stevens said.
“The Government needs to do everything in its power to make sure the current slump is contained, and we will not stand idly by as housing prices continue to surge.”