Not reading The West Australian. The last thing Australian banks need right now is for house prices to slump as they are in the United States and Britain so the ANZ Bank economist Alex Joiner can be forgiven for playing down the likelihood of that happening. High interest rates would deter anxious buyers from pushing prices higher, Mr Joiner confidently predicts, but strong demand from aspiring home owners would also prevent prices from falling. “We might see some of the steam and the frenetic activity come out of some housing markets, but in aggregate we do not expect prices to drop.”

There are plenty of recent Australian homebuyers with borrowings of 90% or more of their purchase price who will hope his forecast proves correct but the evidence is mounting that things might not turn out so benign. In Western Australia, where real estate prices really boomed over the last four or five years, the downwards correction is already well under way. The Real Estate Institute of WA says 17,584 homes and blocks of land are listed for sale, up from about 5000 just 18 months ago and the highest number of homes on the market in 12 years. Institute President Rob Druitt says the 2.7 per cent fall in the median house price for the March quarter from $470,000 at the end of last year to $457,000 was caused by the combination of interest rate rises, a drop in overall consumer sentiment and the record number of listings.

Australian Property Monitors certainly disagrees with the ANZ Bank view. APM general manager Michael McNamara was reported in The West Australian saying that that drop in median prices of 2.7% over the last three months in Perth was the beginning of a trend, with the value of all houses expected to fall at least 10 per cent and houses in the mortgage belt likely to plummet more than 20 per cent. Writing in The Australian this morning, former Reserve Bank economist Dr Don Stammer had two bob each way.

“In my view,” he wrote, “we will escape the severe corrections in average house prices now being experienced in the US and Ireland. Instead, I expect we’ll see modest falls in nominal house prices over the next year or two as average prices adjust to earlier over-optimism, lack of affordability, tighter credit and forced sales. For most of us, even a modest fall in average house prices in Australia will be a new experience.”

Especially for politicians who people tend to turn on when things go bad although these pundits, of course, are just giving their opinions and who knows what the future actually holds. What we do know is that to date people are not inclined to blame the new Labor Government for the increasing economic uncertainty. A Westpoll published this week shows support for the Coalition has dropped by 16 percentage points to a two party preferred 38 per cent when compared with the 54 per cent recorded at the election back in November when WA was the only state where the Coalition actually won a seat.

The power of Sky. There’s no doubt that Australians will learn more from watching and listening to Government Ministers answer questions at a community Cabinet meeting than they ever will from a telecast of question time in the House of Representatives. Last night Sky News showed again that it is on the way to becoming a competent and serious provider of news when it showed in full the meeting at Jamison High School in Penrith where there were serious attempts to answer questions from some in the audience of 500. Prime Minister Kevin Rudd actually seemed to enjoy the whole event. The only pity is that the television audience was probably minuscule but the day is approaching when Sky will be as influential on Australian politics as Fox and CNN are in the United States.

Tabcorp the bookmaker. Having lost one government licence which guaranteed it a cosy profit for doing very little the talk around the racing industry is that Tabcorp is preparing to take out some more insurance about losing another by further building up the bookmaking side of its business. The company currently has a monopoly on totalisator operations in Victoria and NSW but will have to go through a similar process eventually as with its poker machine management business in Victoria. The talk is that the Victorian racing industry in particular is keen to get the TAB licence for itself which explains why Tabcorp is said to be in the process of securing bookmaking licences in other states.

The Daily Reality Check

As the variety of news and opinion on the internet keeps growing it is probably inevitable that the early starters begin to lose ground to the newcomers but some of the major Australian media sites appear to be doing much worse than others.

That graph, taken from the site of the web information company Alexa, is not a precise measure of how many pages are viewed on sites because it only registers those browsers which participate in its surveys but the comparisons over time give us a guide to how sites are performing. Clearly Ninemsn is in a long term decline while the smh and news are both well down on their peak. The news figures, incidentally, combine all the individual sites of News Ltd newspapers and its omnibus news.com.au.

The dumbing down of the Fairfax sites, more pronounced in the smh version than in theage, does not appear to be helping restore the fortunes.

Even adding in the brisbanetimes site, which is not backed by a daily paper, does little to compensate for the decline at smh.com.au

The Pick of this Morning’s Political Coverage

When politics meet sport in the southernmost state the combination is irresistible. The plucky Tasmanian Premier Paul Lennon, who looks very much like a Barry Hall sort of player when dealing with anti pulp mill demonstrators, is off to see Andrew Demetriou, the nation’s real power broker, at AFL headquarters to try and get a team for Tasmania financed with the money of taxpayers.

The Premier probably expects to find a better prepared opponent than Brent Staker but when your local newspaper runs a campaign like that of The Mercury a Premier has got to do what a Premier has got to do.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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