house prices could go higher

  1. 47,086 Posts.
    Egan says house prices could go higher

    House prices in NSW could rise even higher if the current growth in home lending keeps outstripping growth in building approvals, NSW Treasurer Michael Egan says.

    Mr Egan said he had expected the surge in housing to slow by now.

    "I've been expecting it to slow for five years," he told AAP.

    "What is slowing in housing are the building approval figures, but the home lending figures keep increasing.

    "Now that's a bit of a worry."

    Experts were predicting an oversupply of housing - especially in home units - last year, but that has not eventuated, he said.

    "But if supply starts to fall off and the demand for housing lending keeps increasing, then that's not good for house prices."

    Mr Egan said the 48,000 to 50,000 new homes built in NSW each year were currently in line with underlying demand, unlike in Victoria where home building has been outstripping underlying demand for a long time.

    The NSW housing boom would slow without too much stress, he predicted.

    "I don't think it's going to collapse.

    "For us, it's always a worry because the history of these things is that stamp duty revenue can halve within 12 months (when house sales slow)."

    Mr Egan repeated his government's promise to cut stamp duty rates to first home buyers when it could be afforded.

    "We would look at the reduction being for first time buyers rather than across the board," he said.

    "But our ability to do that depends on how much money we've got to do the things we've got to do and to some extent the condition of the housing market.

    "To reduce stamp duty in a booming market simply means the vendor - not the first time homebuyer - gets the benefit.

    "The time to do it is when the market's in the doldrums."

    Mr Egan also said the state government would send a submission to an inquiry into soaring house prices by the federal government's Productivity Commission, despite his belief it was set up to attack state Labor governments.

    "It has some potential for some good, but I've got no doubt it was motivated and introduced for some short term political gain by the feds," he said.

    "But I've actually got no doubt the Productivity Commission will conduct it properly."

    There was no simple solution to curbing growth in house prices, he said.

    "None of us really benefit from higher house prices."

    Mr Egan said he shared Premier Bob Carr's concern Sydney was becoming an overcrowded city.

    "Probably more than any other city in the world, (Sydney) has got natural constraints in its geographic size.

    "Sydneysiders don't want to live in the sort of density levels that people in other parts of the world are happy to live in, so that does impose constraints."

    ©AAP 2003
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.