CAPITAL city house continue their (mild) falls, 29/7.

'The RP Data-Rismark Hedonic Home Value Index [phew!] fell 0.2 per cent in June from May, according to a survey of almost 150,000 homes nationally. Over the second quarter, home values were down 0.9 per cent. The house price slide in June follows a fall of 0.3 per cent in May, 0.4 per cent in April and 0.5 per cent in March.

'The latest decline comes as speculation grows the Reserve Bank of Australia could raise interest rate next week for the first time since November, responding to a worrying rise in inflation over the last six months.

'Economists say the central bank has a clear case to hike if it wants, but it may delay until September given the jittery state of the world economy as the failure so far of US politicians to resolve their differences over lifting the country's debt ceiling unnerves markets'.

Henry's blog today outlines interest rate arguments.

Housing market slump, 7/4.

'HIGH house prices, interest rate rises and affordability problems are taking their toll on home buyers, with official figures showing home loans dropped nationally for the second consecutive month in February.

'Australian Bureau of Statistics housing finance figures show the number of home loans approved for the month slumped 5.6 per cent to 45,393.

'This followed a revised 6.3 per cent drop in January, with the proportion of lending to first home buyers diminishing to its lowest level in six years'.

For the best macro-view we can muster, click here.

'House prices in Australia have apparently stopped rising but there is a general housing shortage which will be made worse as strong population growth is faced for a time by subdued construction'. 

Housing subdued - for the present, 4/4.

We have been so busy completing Great Crises of Capitalism that regular reporting has been interrupted.  Today we present a general catch up.

There is a chapter in Great Crises that should spark interest - 'Marvellous Melbourne's Astounding property boom and bust'. It suggests the current pause may be followed by an even madder, final (for some time) boom.

Here is the background: 'HOUSE prices in several Melbourne suburbs have risen by almost 4000 per cent since the mid-1970s, easily outstripping other cost increases'.

Another guru said: 'In my reporting of the 2011 market, I’ve also said Melbourne has been “patchy”, faced a “glut” of stock, that it so far “held its ground” in the face of rising supply, but that there are some “troubling signs” emerging and, most recently, that it “appears to be struggling”.'

At present, there seems to be an overall pause in the upward march of house prices, with distinct falls in some of the madder prices in key state capitals, especially Melbourne.

But continued strong population growth will run up against the harsh reality of a slump in new building, creating renewed upward pressure on house prices.

Marvellous Melbourne's astounding housing boom, 21/2.

'Melbourne home owners have enjoyed a boom in price growth over the past 18 months, with the Australian Property Monitors median house price rising by 33 per cent between March 2009 and December 2010'.

My book Great Crises of Capitalism includes a chapter with the title 'Marvellous Melbourne’s Astonishing Property Boom and Bust; and a short subsequent history of Australia'.

The discovery of gold in 1851, and subsequent minaeral discoveries, made Melbourne one of the world's richest cities - some say the richest.

Great development from 1851 to 1880 went with an astounding property boom.

At the end of this chapter is a speculation about the likely future of Melbourne property prices.

More at Henry's blog today. 

Melbourne house prices surge, 22/1.

'Melbourne's bayside suburbs, from expensive Port Melbourne out to the more affordable Seaford, Frankston South and Mount Martha, have led house prices to new heights.

'A record median of $601,500 was reached in the December quarter, growing 6.9 per cent from the previous record of $562,500 set in the September quarter, the Real Estate Institute of Victoria says.

'About half of the top 20 growth suburbs were on the water, with Beaumaris jumping 9.9 per cent, Seaford 8.6 per cent and Mount Eliza 7.9 per cent.

'The record prices are bad news for buyers, especially first-timers, as the cheapest segment of the market had the highest growth.

'Much of the price increase happened with a rush of auctions in October, before the Melbourne Cup Day interest rate rise.

'A lowering of auction clearance rates did not bring any relief from soaring prices, with a parallel rise in the number of private sales and homes sold by negotiation after auction.

'Chief executive Enzo Raimondo said housing affordability would remain an issue for buyers this year.

''Increased house prices in the past quarter and over the past two years are due to an imbalance between housing supply and the needs of our growing population,'' Mr Raimondo said. "This is a systemic problem with the local market and steps need to be taken to increase supply.''