Categorized | International

Australian Home Prices Continue to Drop

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For the fifth time in as many quarters, Australian residential real estate prices experienced a decline. Prices in the eight major Australian cities fell more than one percent during the first quarter of 2012. When compared to one year earlier, prices are down four and a half percent.

 

One of the major factors in bringing prices down is that the central bank in Australia continues to push for high borrowing costs. In fact, the borrowing costs in Australia are the highest of all developed nations.

 

In an effort to prevent further loss to the housing market, the Australian government opted to cut the benchmark interest rate down to three and three-quarters percent. The drop took half a percentage point off the previous benchmark rate. Few economists expected the decline, and the fact that it took place does not bode well for the Australian economy.

 

Some economists are pointing to the fact that Australia had already reduced borrowing costs just a few months ago, and that action had little impact if any. They are not entirely confident that the most recent cut will do anything to help the current situation.

 

The current residential real estate market situation in Australia has all the makings for disaster. The number of homes listed for sale jumped by more than five percent last month while the total number of sales fell by more than nine percent.

 

The decline of the manufacturing and service industries is, most likely, also negatively impacting the housing market. Manufacturing has dropped to its lowest level in seven months last month.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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