Australia's Housing Market Plunges Amid Tax Hikes and Interest Rate Rises
Housing confidence in Australia is plummeting according to recent data from credit check firm Equifax. First-homebuyer applications have dropped by an annual pace of 20.1 per cent nationally in August, a decline steeper than the overall 14.1 per cent drop for all home loans.
The numbers are dramatic and paint a dire picture of the housing market. Younger Australians continue to be hit hardest by current market conditions and cost of living constraints. The decline in first-homebuyer applications has worsened since the Albanese Government's Budget ended negative gearing from July next year for established homes exchanged after May 12.
The changes were designed to promote intergenerational equity, but they have had an opposite effect. Combined with three Reserve Bank of Australia interest rate rises this year and higher prices flowing from the Middle East crisis, the policy has sent prospective buyers to the sidelines.
New home sales fell by 10 per cent in August for a quarterly plunge of 19.3 per cent and an annual decline of 7.7 per cent. The Housing Industry Association's chief economist Tim Reardon warned that 'the new home market cannot absorb further interest rate increases on top of the tax increases announced in this year's Federal Budget.'
Victoria had the steepest quarterly decline at 27 per cent, followed by Queensland on 20.2 per cent and NSW on 17.5 per cent. South Australia saw a 10.8 per cent slide and Western Australia suffered an 8.2 per cent plunge.