The latest figures say new home sales have slumped (file photo) (ABC News: Cate Grant) Fresh evidence has emerged that rising interest rates really have put an end to the property boom.
Amid all the talk of a rental crisis, the pace of growth in credit for investor housing has sunk to a record low, with separate figures showing a 6 per cent drop in sales of new houses and units.
But the downturn here pales compared to the United States.
According to a highly-regarded index, American house prices are in their worst ever slump, with no sign that the bottom is in sight.
Prices have fallen by 25 per cent in some cities over the past year and by about 13 per cent on average nationwide. For the first time, prices are falling right across the United States.
Down under, with rents soaring and the tightest rental market in years, you might think that people would be pouring into investment property. But you would be wrong.
Investor housing is by far the worst hit. The Reserve Bank has been keeping separate figures on that sector for 17 years and it is growing at the slowest pace ever seen.
There is only one explanation says Australian Property Monitors' Michael McNamara: the cheap credit has dried up.
"The Australian property market is being hit by a double whammy. Firstly we're seeing rapidly rising mortgage rates and that means that the cost of debt is a deterrent for investors to come into the market," he said.
"On the other hand, what we're seeing is a retraction of debt and that means that lenders neither have the capacity nor the appetite to lend us more money."
It is a sharp contrast to the height of the boom in late 2002 and early 2003.
Back then, finance to landlords was growing by 25 per cent a year. Now the pace of growth is down to just 9.5 per cent.
The Reserve Bank figures dovetail with Australian Property Monitors' own research. It shows that house prices were flat overall in the first three months of this year and are headed for a fall.
"It came as a surprise to us just how abrupt the change in sentiment has been," Mr McNamara said.
"I mean after all, Melbourne, Adelaide, Brisbane all experienced 20 per cent plus rates of change in their values over the last 12 months.
"To see that situation in the property market change so abruptly in the March quarter, where we saw declines and little or no growth across all major capitals, was quite remarkable."
New figures released today by the Housing Industry Association (HIA) say new home sales have slumped.
"The number of new homes that are being sold by Australia's largest 100 builders are actually on the decline, and that's suggesting that the weakness we've been seeing in new home building is going to be with us for some time yet," chief economist Harley Dale said.
Its latest survey shows a 6 per cent fall in new home sales by the top 100 builders, which the association says will only add to the surge in rents.
"I think there's cause for quite some concern about the impact that tight rental markets are having on lower income rental households," Mr Dale said.
"We've had a quite acute shortage of rental accommodation in Australia for a couple of years now and that's where you're seeing these significant upward pressures on rental payments coming through.
"The signs from a wide range of housing indicators are that those tight rental market conditions are going to stay with us probably for at least another 12 months, in reflection of the fact that we're simply not investing enough and putting new rental product on the ground."
US housing slump
But the housing downturn in Australia is nothing compared to the collapse in America.
Standard and Poor's compiles the most respected index of US house prices, designed by two esteemed professors of economics, Karl Case and Robert Shiller.
The latest figures from the Case-Shiller index show the worst slump in US house prices in history.
"One of the issues today is this is a national phenomenon. That is, it's happening in all 20 cities. We've never had a down real estate market in the country as a whole," Mr Case said.
"They're down substantially. They're down more than at any other time since we've been keeping track of this."
Seventeen of the 20 cities surveyed showed record annual declines - 20 per cent or more in Las Vegas, Phoenix and Miami, and nearly 13 per cent on average nationwide.
And it looks worse if you take the past three months' figures and annualise them.
Then you are looking at a 25 per cent slump across America, and few think the market has hit the bottom. That precipitous fall means that many millions of Americans now owe more on their mortgages than their houses are worth.
According to new research, about half of all the borrowers in the subprime and low-doc loan market who took out loans during the past two-and-a-half years will soon suffer that fate.
That significantly increases the risk of default on home loans worth about $US800 billion.
The latest US GDP figures may show that America is in recession and the housing gloom adds weight to the pessimists who think that this could be the worst recession in a long, long time.
