We knew that the ANZ Job ads report for April was going to be gloomy.
What we didn’t know was that house prices would fall so sharply (by a record amount) in the March quarter and the year to March.
It was enough to get some gloom and doom merchants chattering on about a need for a rate cut from the Reserve Bank at today’s board meeting, and claiming that the long forecast house price slump was underway.
Well, it might be, but I’d reckon the slump is being driven by the collapse in house prices at the top end of the market, not the bottom, or subprime sector, as we have seen in the US.
The Reserve Bank has been tracking house prices according to post code, and has found that the fall in the wealthier post codes has been larger than in the medium and cheaper priced areas.
But whatever the reason, the fall in house prices not only accelerated in the March quarter, falling by a record amount in the year to March, it and topped the previous 12 month record fall set in the December quarter.
Australian Bureau of Statistics figures released yesterday Figures showed a larger than expected 2.2% drop in the March quarter, negating claims from private surveys of a price rise with the pace of fall accelerating in most cities in recent months.
The ABS figures showed the House Price Index for the eight major capital cities fell a huge 6.7% in the year to March. The previous record was 3.3% in the year to December.
But that was revised with the 0.8% fall upped to a drop of 1.2% and the yearly fall to a larger 3.9%.
A fall of 2.2% in the quarter was much larger than the market had expected (no change) and greater than any of the forecasts (top estimate for a fall was 2%).
It’s clear the collapse of the resources boom continues to hurt Brisbane and Perth house prices, but strangely enough, not Darwin.
But there was no impact from the claimed boost to prices of houses under $600,000 from the first home buyer’s grant.
What ever increase in this category of houses has been completely swamped by the larger fall in more expensive housing in cities like Melbourne and Sydney.
In both those cities it’s the collapse of the stockmarket, margin calls on investors and tumbling asset values that have hurt house prices in the more expensive post codes (Palm Beach, Whale Beach and Avalon, plus Mosman, and some Eastern suburbs such as Rose Bay, Bellevue Hill and Paddington in Sydney) and Brighton, Toorak, South Yarra, etc in Melbourne).
At the same time the ANZ Job ads survey showed another poor month in April with a large fall.
The survey showed job ads dropped again in April, marking a full year of monthly falls as demand for staff remains half the level of a year ago.
The ANZ said online and newspaper job ads fell 7.5% in April, a smaller fall than the 8.5% drop in March and larger falls earlier in the year.
That left vacancies advertised online and in newspapers in the year to April down 49.9% below a year ago.
The fall in April came from a slump in online ads, which more than offset a 3.1% rise in newspaper ads, the first for months.
The ANZ survey was supported by the Oliver Job Index which showed that the number of jobs advertised online halved over the past year, down 7.4% in April, taking the year-to-April figure down 49.8%.
The April jobless and unemployment figures are out on Thursday.
The fear some analysts rightly have is that the surge in unemployment coincides with the slump in house prices extending into lower price brackets.
But the banks and the federal government have a deal in place that will give the opportunity for borrowers to restructure home loans for six to 12 months (and possibly more) if they get into financial troubles or lose their jobs.
The ANZ job ads results and the slump in house prices offset relatively good news from the TD Securities-Melbourne Institute monthly inflation gauge which was unchanged in April, following a 0.1% decline in March.
Rising prices for healthcare and holiday travel offset falls in the cost of rent and transportation, producing the flat result.
But the big surprise was the sharper than expected fall in house prices, led by a 10% plunge in Perth over the year.
Darwin was the best performer with a 10.8% rise there, setting up that market for a fall later in the year, perhaps. Hobart was the only other capital to record a rise, a very modest 0.6% over the year.
The ABS said:" Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities decreased 2.2% in the March quarter 2009.
“The main contributors to the decrease were Sydney (-2.9%), Melbourne (-2.3%), Perth (-3.6%), Brisbane (-1.1%) and Adelaide (-0.8%). These decreases were partially offset by increases in Darwin (+2.2%), Canberra (+0.5%) and Hobart (+0.1%).
"The movement in the preliminary established house price index between September and December quarters 2008 has been revised from an estimated decrease of 0.8% to an estimated decrease of 1.2%."
Given the large revision in the December quarter’s figure, there’s every chance the March quarter fall could be increased in the next report from the ABS.
The ABS reported that "Over the year to March 2009, preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities decreased 6.7%.
“Annually, house prices rose in Darwin (+10.8%) and Hobart (+0.6%), and fell in Perth (-10.1%), Sydney (-7.3%), Melbourne (-6.7%),
