You've got to keep a floor under house prices at any cost !!

Now it's plan D. Use a surplus to stop house prices from collapsing.

http://www.heraldsun.com.au/business/property-drop-imperils-surplus/story-fn7j19iv-1226349279693


Quote:

AUSTRALIA'S property market continues to languish, putting immense pressure on the Federal Government's plan for a Budget surplus, economists warn. Despite a small uptick in building approvals and the Reserve Bank's decision to slash interest rates, economists are calling on Treasurer Wayne Swan to use the Budget as a "catalyst" to tackle weakness in the property market. Deloitte Access Economics director Chris Richardson warns housing prices are down 5 per cent nationally over the past 18 months. The disappearance of the glory days of capital gains tax revenue has left the Federal Government with a much smaller revenue base, Mr Richardson says. He is tipping a $6 billion revenue shortfall next financial year as a result of falling corporate and household tax revenues. But Mr Richardson said a budget surplus was a "dead cert" - albeit for political purposes rather than economic necessity. He is forecasting the Government will need to deliver $10 billion in spending cuts to deliver a Budget surplus. While this might trigger a series of interest rate cuts, the knock-on effect for the broader economy could be damaging, he says. After 15 months of consecutive falls, the number of dwellings approved in March climbed 0.3 per cent, according to the latest Australian Bureau of Statistics figures. But the patchwork nature of the economy meant approvals in Victoria remained in negative territory - with the value of approved work down $350 million on the same month a year ago. The figures show building approvals in Victoria in the March quarter were 26.7 per cent below last year's level at 10,704 units - down from 14,601 in the March quarter 2011. In a further blow to the already struggling construction industry, the Australian Industry Group Performance of Construction Index showed the sector in freefall. The index was in negative territory for the 23rd consecutive month, off 1.3 points to 34.9 points. Readings below 50 indicate contraction. Apartment building was the weakest of the four sub-sectors with an index reading of only 22.9, closely followed by house building (33.3) and commercial construction (35.2). ANZ is tipping that the Reserve Bank will cut the official cash rate to 3 per cent before the end of the year - a fall of a further 75 basis points- as it continues to stoke the economy. Futures markets betting points to a 65 per cent chance that the RBA will cut the official cash rate a further 25 basis points next month.

Why? The prices should drop. Nobody can afford real estate anymore.

SOB

It doesn't really matter what protective measures the government use to prop up the failing property market, the market will decline due to a series of events such as recession/depression. The best they can do is slow up the process like they have been doing over the last five years. It's just kicking the can further down the street, the end result will be the same.

Sir Spot of Borg wrote on May 8^th, 2012 at 9:47am:

Why? The prices should drop. Nobody can afford real estate anymore. SOB

they seem to like it like that.

Ex Dame Pansi wrote on May 8^th, 2012 at 9:54am:

It doesn't really matter what protective measures the government use to prop up the failing property market, the market will decline due to a series of events such as recession/depression. The best they can do is slow up the process like they have been doing over the last five years. It's just kicking the can further down the street, the end result will be the same.

watch them try and pull another rabbit out of their hat ;)