Avalanche of foolish federal and state government decisions hurting fragile property markets: John Edwards

An apologetically "downbeat” John Edwards has slammed what he calls an “avalanche” of “foolish government actions” which he says could potentially cause undesirable outcomes for fragile property markets.

His attack on government policies accompanied the release of Residex August property market results, where house prices fell 0.8%, with Perth the best-performing capital city with a gain of 2.19% with Sydney and Melbourne house prices flat.

“The simple truth is, in an environment where sentiment is fragile negative news accumulates and contributes to low consumer sentiment," writes Edwards.

“This is perhaps partially responsible for the market downturn in the dwelling price growth in August, after the growth that appeared to be getting underway in July. I also note that the press was reporting a slowing in the Chinese economy in August."

In his blog, he laments the recent actions of federal and state governments and the RBA, which he says could be the “wrong choices”.

“Although housing markets have shown signs of improvement recently, these are progressing at a snail’s pace and remain fragile.

“Decisions made by governments and the Reserve Bank could arguably be the ‘wrong’ choices as far as Australian housing markets are concerned and could potentially cause undesirable outcomes,” says Edwards.

Edwards says he wonders if state governments and the federal government “have lost sight of the reason for governing”.

“It seems that it has become more about scoring points and staying in power rather than working together for the best interest of the population.

“The time for governments to work together to restore consumer confidence in our nation has become critical. We are currently experiencing what I can describe as nothing other than an avalanche of what are, in my opinion, foolish government actions.”

Edwards claims the federal government’s carbon tax and resource tax being have been introduced to “ensure a political benefit from a budget surplus”. He also says state governments have retaliated against an uneven distribution of the GST take by doing what they can to gather cash to keep their budgets at acceptable levels by increasing mining royalties and instigating “significant job shedding at a state level”.

“I am left wondering what has to happen to have all governments work as a team for the collective good of Australia.

“The reality is that Australia is headed for trouble if the resources economy stalls badly and unemployment increases. Australia needs to move to remove the Carbon Tax and the Resource Tax and implement a GST to compensate, and maintain a climate where Australian corporations are internationally competitive in the global market, which is contracting due to the difficulties in the US and Europe,” he says.

Looking at the property market more closely, Edwards notes that with current interest rate setting being attractive, “the market should be moving forward more strongly than what we are seeing”.

With auction clearance rates “stubbornly holding within the 50% to 60% range", Edwards says it is difficult to believe that the market is as robust as the press is suggesting.

“According to Residex calculations, capital growth, which is currently more volatile than normal, is again trending down, lending credence to the view that consumers are concerned and uncertain of the future.

“I believe the slow pace to better times is a result of uncertainty and that any significant improvement won’t be seen until there is uplift in sentiment.”

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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