Thousands Give Up On Home Ownership Dream
10 July 08Australians are abandoning the dream of home ownership in record numbers, with new figures showing a collapse in residential borrowing since the start of February.
The number of new loans for owner-occupied housing fell by a seasonally adjusted 7.9% in May, according to the ABS, and by an unprecedented 25% in the four months to the end of May.
The figures, blamed on rising interest rates, soaring petrol prices and the sharemarket rout, have sounded alarm bells for Australia's home building industry and for the broader economy.
The slowing in residential construction predicted to flow from reduced lending could not come at a worse time, as Australia already struggles to house a booming population fuelled by the biggest migrant influx on record and a higher birth rate.
People locked out of home ownership due to the supply shortage and downturn in lending will be forced to rent, putting more pressure on an already tight rental market and forcing rents even higher.
"Australia has never experienced anything like it," said Craig James, chief equities economist at CommSec, referring to the collapse in home lending. "Something has to give unless you are going to have people in their 30s and 40s still living at home with Mum and Dad."
Economists blamed the bigger-than-expected decline in the number and value of new loans on higher interest rates, and the extra strain on family budgets caused by higher fuel and food prices.
Source: The Age 10th July 2008