Australia’s House Price Slide Poses Threat to Economy

Free iPads, rental guarantees and an eye-watering A$100,000 ($72,000) off the price of an apartment are some of the sweeteners on offer from property developers amid the worst housing downturn in Australia for 35 years, the Financial Times reported. National house prices fell 1.3 per cent in December, the largest monthly fall since 1983, which resulted in an annual decline of 6.1 per cent last year. Prices in Sydney, the country’s biggest property market, are down 11.1 per cent from their peak, according to Morgan Stanley, which warned this week the slump could torpedo Australia’s run of 27 years without a recession — a modern global record. “We think the steep downturn in house prices exposes Australia to the risk of recession, particularly in the context of an exogenous shock such as slowdown in Chinese growth,” said Daniel Blake, lead author of the Morgan Stanley report. Read more