House prices tipped to keep falling

The Treasury's economic and fiscal update had a gloomy house price outlook, citing increasing unemployment as a factor putting on pressure.

Nominal house prices are forecast to decline nearly 8 per cent in the year to March 2010 and a further 4 per cent in the year to March 2011. They are already down an annual 9 per cent.

House price drops would cause attitudes to personal wealth to change, the update said.

"This will not only affect households' perceptions of wealth but will also severely constrain the ability of households to borrow against their houses to finance spending."

The Treasury also forecast low levels of investment in property and noted annual building consents were at their lowest in over 25 years.

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Posted: 29 May 2009

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