Australia New Home Loans Fall by Record as Housing Market Turns
Australia's housing market is turning fast. This week saw the steepest drop in new home loans ever recorded. The slide follows the highest interest rates
Australia's housing market is turning fast. This week saw the steepest drop in new home loans ever recorded.
The slide follows the highest interest rates in 18 years. It also follows a government push on two fronts: more homes on the supply side, and less investor demand on the other.
Two policies, one turning market
The supply push began three years ago with a national agreement to build 1.2 million homes in five years. The target is likely to be missed. Even so, it committed political leaders to tackling the root cause of the housing crisis after years of lip service.
The demand push came later. Last year's economic roundtable, a closed-door event that initially looked like a dud, helped Treasurer Jim Chalmers revive Labor's old plan to wind back negative gearing. Negative gearing lets property investors offset rental losses against other income at tax time.
Chalmers has framed the change as a boost for homebuyers over investors.
Do Australians want cheaper homes?
Commentators have long asked a blunt question. For all the hand-wringing over the housing crisis, would Australians welcome a real fix when one arrived? Cheaper homes for the young can only mean less valuable homes for those who already own them.
The sharp fall in lending now puts that question to a test. The market that long seemed unable to turn is moving quickly, with interest rates at an 18-year high and tax changes aimed at investors both in play.
