Australia Housing Price Drops!

Falling house prices have prompted fears of a US style crisis in Australia as a new report show prices will fall by 10 per cent in the next year.

The Australian Property Monitors index says house values have been falling in most capital cities in the last quarter with Melbourne down 0.6 per cent.
But economists say demand for housing driven by strong employment and immigration should ease dramatic price falls.

CommSec economist Savanth Sebastian said even if the US economy slumped, it would have only a marginal effect on growth as Australia's trade was with Asia, and China in particular.

Later today the Housing Industry Association will provide its building hot spots report for the 2007-08 year.

Meanwhile, US Treasury Secretary Henry Paulson expects 'moderate' growth in the US economy this year and some stability returning to the housing market in a matter of months.

ANZ chief economist Saul Eslake said "As long as employment remains strong, which it has done over the last six months, you're not going to see any major lay-offs or foreclosures," he said.

Sources: The Age; Natalie Craig, August 1st 2008
Sky News On-line, August 1st, 2008