Shadow treasurer Tim Wilson has taken aim at his Labor counterpart for having “crashed the confidence” in the Australian economy as Jim Chalmers insists the housing market is resilient.
Fresh data from property analytics firm Cotality for the June quarter found Labor’s move to dump the capital gains tax discount and roll back negative gearing had contributed to property sales to sink.
Cotality’s Home Value Index (HVI), which analyses property sales data, fell 0.4 per cent in June, marking the largest month-on-month decline since December 2022.
Speaking to Sky News on Wednesday, Mr Wilson said the latest budget had caused a “crisis of confidence” in the Australian economy.
“Jim Chalmers has crashed the confidence of the Australian economy,” he told Sky News First Edition on Wednesday.
Mr Wilson said despite the government’s intention to help young Australians buy a home, there had been no significant increase in mortgage loans being issued to them.
“Since his federal budget nearly two months ago, what’s happened is a crisis of confidence in the Australian economy, we’ve had record small business insolvencies, record low small business confidence, record low consumer confidence,” he said.
“And despite all the claims that it’s about young people getting into housing, I’m told that banks are saying there’s not a lot of debt being issued to young people trying to buy a home.”
It comes as fresh figures in the latest Sky News Pulse / YouGov poll show 49 per cent of voters want property values to decline.
Just 17 per cent of Australians said they want house prices to rise, while 26 per cent were happy for them to stay about the same. Eight per cent of voters were unsure.
Mr Wilson said public opinion was not the primary market mover, but that it did affect confidence.
“All Australians want young Australians to have a chance to be able to get into their first home, to get their foot on the property ladder and to be able to secure something for themselves and for their families,” he said.
“We’ve got a significant problem with the housing market right now, where we know that prices have exponentially grown. Nobody’s sort of arguing against that. The question is, is it sustainable?
“Wages are going backwards while we’ve got house prices until recently going forwards … We need young Australians to have hope and ambition for the future, and the government’s only solution to that is new taxes.”
On Wednesday, Treasurer Chalmers said Australians should not get “too carried away” with property price developments after a slump in housing prices in Sydney, Melbourne and Canberra.
“Housing is a long term investment so people shouldn’t get too carried away by weekly and monthly developments in house prices,” Mr Chalmers told reporters on Wednesday.
“The Treasury’s assumption in the budget is that house prices will continue to grow but a bit more slowly.”
Mr Chalmers said the Albanese government’s goal was to “make things easier for first home buyers” and that from Wednesday some of Labor’s cost of living relief measures would come into effect.
“Today is a really important day, today is July 1, that means more cost of living help is on the way,” he said.
“From today we’ve got more tax cuts, more pay rises, we extend paid parental leave, the instant asset write-off for small business, we pay super on pay-day and there’s more relief at the bowser.”
Housing Industry Association chief economist Tim Reardon said the slump in house prices nationwide was “entirely caused by the government talking”.
“Every builder in the past week, all the big guys are seeing what we are seeing,” Mr Reardon told News Corp.
“A collapse in the work coming into the pipeline. The number of contracts out is down, the number of quotes being issued is down, the number of sales is down.
“It just highlights that in making the changes to investors, they (the federal government) also undermined the confidence of owner occupiers and first-time buyers.”
Mr Reardon argued the changes which were designed to help first home buyers had instead sparked a wider decline in confidence.
“We haven’t seen market confidence collapse this quickly since the start of the pandemic,” he said.
“There is only one thing more important to the outlook for home building other than interest rates and that is market confidence.”
REA Group data showed the preliminary auction clearance rate across Australia was about 43.2 per cent last week, significantly below the decade average of about 65 per cent.