New South Wales Queensland Victoria Tasmania South Australia Western Australia Property News Residential
Interest rates affect housing market more than government grants
Macroeconomic factors such as interest rate cuts play a more influential role in boosting housing activity than state-based support schemes, according to research by Deutsche Bank.
A month after the Queensland government launched its $10,000 Building Boost program aimed at encouraging the building of new homes, the bank says the impact of similar state schemes in Victoria (up to $26,500 for construction of a new home in regional areas) and South Australia ($8,000 to home buyers for the construction of a new home) has been mixed.
The bank compared the impact of dwelling approvals in Victoria and South Australia against approvals in New South Wales, Queensland, Western Australia and Tasmania.
According to the bank, the results suggest that the subsidies implemented in Victoria helped to boost housing construction activity relative to other states. On the other hand, the subsidy available in South Australia is yet to have a material impact on relative activity.
“In Victoria’s case, other states saw a rebound in activity at about the same time that the Victorian subsidy was introduced. However, the rebound in Victoria was stronger – and was sustained for longer.
“By contrast, activity in South Australia has broadly tracked activity in other states since the introduction of the new home construction subsidy in September last year”.
In both cases, the evidence suggests that broader macroeconomic factors play a more influential role on housing activity than state-based support schemes with dwelling approvals closely linked to changes in the cash rate.
As an obvious example, the recovery in dwelling approvals after October 2008 was associated with the reduction in the cash rate to an "emergency" level of 3%
“The sum of the above suggests to us that the Queensland government’s building boost program may offer some limited support for dwelling construction, but the evidence overwhelmingly suggests that broader macroeconomic conditions, particularly the level of interest rates and by implication housing affordability, is a far more important determinant of housing construction,” the report says.
The findings come on the back of the government recently admitting that it had not examined long-running claims that the introduction of the first-home owners grant may have resulted in house prices appreciation, thus doing little to alleviate affordability worries.
The best of everything at Portside Wharf
The Mark at Sydney's Central Park
The Block's Dan and Dani - last spotted looking around the Melbourne suburb of Kingsville - merely tweeted their acquisition with little fanfare. But there certainly weren't any tweets from the international film star Toni Collette about her recent property journey.
Brought to you by: Caydon
Atria Apartments in Hawthorn offers buyers an opportunity to invest in one of Melbourne’s finest suburbs.
Crown's $40 million Barangaroo serviced apartment - atop James Packer's "Hoover vacuum cleaner-shaped" highrise casino