The future of Australian property prices

[moXJO]

Australian House Prices down 10% from Peak

by Steve Keen on May 1st, 2012 at 2:04 pm Posted In: Debtwatch

Thats f**king it?
I thought it was suppose to be at least 50% by now.
Maybe next year.

 

[Glen48]

It may not happen over night but it will happen...be slow and over a long time so you will get your wish.

 

[MrBurns]

It may not happen over night but it will happen...be slow and over a long time so you will get your wish.

Wish it or not it's on its way -

Watch for -

job losses
insolvencies
retail sales figures
auction pass in rates

it will happen in slow motion, everything slows down , almost stops, it's only after it's obvious to everyone will it be talked about as fact.

Banks are waiting to foreclose without attracting adverse publicity.

 

[moXJO]

It may not happen over night but it will happen...be slow and over a long time so you will get your wish.

Flat to slow decline that’s what the majority of the labelled property bulls have been saying. I will say this if we don't get stable government in the next 6 months that begins to tackle productivity, IR and gets back to developing relationships with our Asian neighbours then I'm all in on that 'very hard landing' call.

 

[young-gun]

Flat to slow decline that’s what the majority of the labelled property bulls have been saying. I will say this if we don't get stable government in the next 6 months that begins to tackle productivity, IR and gets back to developing relationships with our Asian neighbours then I'm all in on that 'very hard landing' call.

and it took a while for them to come to terms with the potential of a 'flat to slow decline'. i can only imagine how hard its gonna be for the poor fellas when the wheels fall off. is there medication for denial?

it would appear we are entering into quite the downward spiral, as TS pointed out the other day unemployment and job cuts are hitting the head lines, in my short time I don't recall seeing so many thousands of jobs lost/being cut by large corporations all over the news, and almost on a daily basis. companies cutting back spending, battening down the hatches. the question is when will RE investors start to consider cutting their losses, and taking profits before it's too late?

i work with 2 guys who just bought an IP 2-3 months ago, they are both already worth less than they paid. can't imagine thats a good feeling.?

 

[Mrmagoo]

I gotta say I can't wait for the crash. All those evil property investors. I can't wait to see the tears.

I mean it is so immoral. You're buying an asset on the expectation it will cause financial hardship to a young family. You want that next person who needs a place to live to pay 100k more 2 years down the track... immoral. Wrong.

A house is a necessity of life...

Why not invest in publicly listed building companies ? Provide the funds to build more properties... nope... it is all one big evil scam.

 

[Glen48]

The best con has been calling it Investment Property when not many have made money and those with property now are letting all their Black chips ride on the roulette wheel not knowing the Red or Zero will turn up.
They should have cashed in when they had the chance waited and got back in the market once it hit the floor and own a better piece of RE at a cheaper price.

To RE shill's it means IP ...in your pocket ..

 

[Beej]

Thats f**king it?
I thought it was suppose to be at least 50% by now.
Maybe next year.

And to get even that mildly impressive sounding minus 10% figure, Keen had to use inflation / CPI adjustment to the numbers!

In nominal terms, according to both ABS and RP-Data, the current Aussie property market cycle peaked around June 2010, and since then has fallen 6% over 21 months to end of Mar 2012, based on the weighted capital city indexes. Prior to June 2010, prices increased by 21% from the previous low point of March 2009. Results do vary quite a bit between individual cities though.

The big question is what will we see from here? Perplexingly, APM recorded a positive numbers on average for Q1 2012 (+0.9%), RP-Data was basically flat (-0.1%), and Residex + ABS published negative numbers of (-0.7% and -1.1%).

For Sydney, all providers bar ABS had a positive Q1 number - APM: +1.4%, Residex: +1.73%, APM: +1.2%, ABS -1.8%

For Perth, everyone including ABS had a positive number - APM: +0.1%, Residex: +3.95% APM: +0.7%, ABS: +1.1%

Housing finance numbers and FHB proportion reported in those figures steadily improved from mid last year until the present time, and this is often a leading indicator of improving conditions. Auction clearance rates in the key auction cities of Melbourne and Sydney were pretty ordinary up until Xmas, but have improved a bit this year up to recent weeks. Both Melbourne and Sydney have reported clearance rates of ~60%+ this weekend, and for the past few weekends (barring one poor result for Sydney after the Anzac day holiday week).

I note that last time the market turned from falling to rising prices back in early 2009, there was a similar period of confusing / conflicting house price data, with the ABS in particular lagging quite a bit before reporting the rising prices. Likewise, the finance data and auction clearance rates had been improving steadily for 6 months or so before the market started to turn.

Given all of this, and the recent interest rate cut, with the likely-hood of more to come, my feeling is that the bottom is in for this cycle for now, and that we may see some steadily rising prices from here. Perth and Sydney will probably provide the bulk of this I think, with Brisbane not far behind. I'm not thinking 20% in a year gains or anything, I just think flat to low growth for a while, spurred on by the tight rental market and rising rents in the key cities - especially Sydney and Perth.

EDIT: Here's a good RBA graph showing national average rental yields and vacancy rates (I prefer city by city data though):



And here's the ABS housing finance data:

Like always I still say though, every market is local. Anyone thinking of buying or selling at the moment needs to watch what's going on in their local area very closely. Real bargains only really come up when there are distressed / forced sales. I'm sure the serious property investors are actively looking out for these in many areas at the moment. There are a couple of auctions next weekend in my local area that will give me a good feel for what the demand is like around where I live at the moment, so looking forward to see how those go.

 

[Mrmagoo]

I feel like it is 05 all over again..

how far can it go down ?

how far down are we now ?

no one knows

the only certainty

its is falling

 

[Glen48]

Given all of this, and the recent interest rate cut, with the likely-hood of more to come, my feeling is that the bottom is in for this cycle for now, and that we may see some steadily rising prices from here. Perth and Sydney will probably provide the bulk of this I think, with Brisbane not far behind. I'm not thinking 20% in a year gains or anything, I just think flat to low growth for a while, spurred on by the tight rental market and rising rents in the key cities - especially Sydney and Perth.

Hold that thought for a few months and see how wrong your are.

 

[Starcraftmazter]

Given all of this, and the recent interest rate cut, with the likely-hood of more to come, my feeling is that the bottom is in for this cycle for now

NOPE. Even if interest rates will eventually be 0.125%, house prices in Australia will still fall.

 

[Miss Hale]

Has anyone else noticed this?

Here in Melbourne we get a glossy property magazine with our local paper. Each week they profile a suburb. When I first moved back to Melbourne mid last year I noticed that the graph showing median house price only went as fas as 2010, fair enough I thought, we are only midway through 2011. However, it's now well into 2012 and they are still only showing data up until 2011. I think this is very misleading as the prices have dropped since 2010 and just glancing at this graph you would think they are on the way up.

 

[Knobby22]

That is very dodgy, can I ask the paper?

 

[Starcraftmazter]

Well of course - property bulls/spruikers are amazing creatures - anything which doesn't fit in with their "house prices double every 7 years!" religion is blocked out by their brain. They are sort of like the cult of scientology - in that, they will keep the "truth" away from their minions at all costs.

 

[Miss Hale]

That is very dodgy, can I ask the paper?

It's a property glossy that comes with our free local paper which is the "Whitehorse Leader", the glossy mag is called "Manningham/Whitehorse Leader Property". I assume there is a similar version for all of the various localities in Melbourne.

Also, in my above post with the graph I meant to say that they are still only showing data up until 2010 (I inadvertantly typed 2011)

 

[Knobby22]

Yep, as I thought, News Limited.

33 titles over all of Melbourne.

http://www.newsspace.com.au/communitynews/leader

 

[Starcraftmazter]

Yep, as I thought, News Limited.

That explains it.

 

[maffu]

What is going on here? Has there developed such a laissez-faire culture where clients don't routinely check e.g. specifications, are in love with a dream and just OK whatever the builder does?
Are builders so accustomed to this loose and casual approach that they are unwilling to accommodate a client who expects what has been promised?

Buying/building a house is one of the most significant capital events in any of our lives and surely most people would be careful to ensure they're actually getting what has been promised? Perhaps not.

I'd be interested to know if others have had similar experiences.

Julia, when you decided to not go ahead with the building, and cancelled during the cooling off period, did the Builder try a bit harder to convince you to go ahead with it? Or did he just continue to ignore you?
If business was as bad for builders as many have mentioned, I thought he would have been busting his gut trying to suck up to you and get the contract.

 

[young-gun]

Well of course - property bulls/spruikers are amazing creatures - anything which doesn't fit in with their "house prices double every 7 years!" religion is blocked out by their brain. They are sort of like the cult of scientology - in that, they will keep the "truth" away from their minions at all costs.

ohh come on now star, give them a break! I'm sure they are trying their best to present the unknowing with some positive data, it's not their fault that there isn't any.

 

[Starcraftmazter]

ohh come on now star, give them a break! I'm sure they are trying their best to present the unknowing with some positive data, it's not their fault that there isn't any.

I bet they pray to their satanic prophet of easy credit every night for some sort of a miracle