Housing woes, here and abroad: Economy roundup

Australia’s housing sector isn’t well. But compared to the US, it is a positive picture of robust health.

Australia’s housing sector isn’t well. But compared to the US, it is a positive picture of robust health.

The number of new buildings approved for construction in June fell 0.7% in June, according to data released today, disappointing already pessimistic market forecasts of a 1% lift.

The volume of new housing approvals in June was down 7.8% on the same time in 2007, and is likely to get worse before it gets better.

The high level of house prices and rentals in much of the country means there is a strong appetite for new housing, but it is being suppressed by high interest rates and the fear of further rises to come.

But all that pales into nothingness compared to the calamitous situation home owners in the US find themselves.

According to the S&P/Case-Shiller index of residential property values, the average US house price fell 15.8% between May 2007 and May 2008, the biggest decline measured in the index’s seven year history.

And keep in mind this is the average drop – home owners in areas hardest hit by the sub-prime crunch are likely to have seen much bigger falls.

Australian sharemarkets have this morning shown their first tentative signs of recovery after the bank led falls of recent days, with the S&P/ASX200 up 2.1% to 4947.3 at 12.25pm. Property stocks such as Mirvac and Valad, and financials including Macquarie Group, have experienced the biggest gains.