A couple of interesting things in this article, aside of the 7.5% house drop in sydney and 13% drop in melby…
(1) the discrepancy between APM and Residex’s median price – tsk- who are we to believe?
(2) Seems like Darwin is the marketplace to be right now!Oh, and for those who might complain aboutr media beatups, doom and gloom etc… some of us like to keep up with what’s going on in the RE market. For those who prefer not to see the current state of Australia’s market, you might not wish to read the article reprinted below.
For others, any comments/thoughts?
kay henry
Sydney and Melbourne real estate prices drop
PRINT FRIENDLY EMAIL STORY
PM – Wednesday, 26 May , 2004 18:39:19
Reporter: Ben Knight
MARK COLVIN: A new survey of Australian house prices has shown huge falls in most major cities since December.Figures from Australian Property Monitors say house prices in Melbourne fell 13 per cent. In Sydney, prices dropped by seven-and-a-half per cent.
Ben Knight reports.
BEN KNIGHT: In a real estate office in the Melbourne suburb of Collingwood, there’s a picture on the wall of an elderly man with his head in his hands and below it, is a caption – “the young man who waited for house prices to fall”.
Well, that man’s time has finally come, at least according to today’s figures from Australian Property Monitors.
APM’s Research Director is Louis Christopher.
LOUIS CHRISTOPHER: The degree of decline is what is of major concern. Seeing an eight per cent decline – effectively an eight per cent decline – for Sydney houses and a 13 per cent decline for Melbourne houses indicates that certainly something nasty is going on in the marketplace, and that is that buyers have well and truly stepped back from the marketplace and sellers are having to reduce their price in order to meet the market.
BEN KNIGHT: Despite the falls during the March quarter, Melbourne is still up three per cent for the year, while Sydney has risen by 13-and-a-half per cent. The news is much worse for apartments, particularly in the CBDs, which have dropped not just during the quarter but over the 12 months.
Elsewhere, the changes have been far less dramatic. During the March quarter, Brisbane and Gold Coast house prices dropped by just one per cent, and both markets are still well ahead over the long term.
The figures show that Perth and Canberra prices have stalled, but they’re also well up over the year, while Adelaide and Darwin are showing positive figure all round. In fact Darwin prices rose by almost 10 per cent in the March quarter.
But in the two biggest markets, Sydney and Melbourne, these results point to a sudden and significant change in mood among homebuyers.
Louis Christopher blames it on interest rate rises on top of high levels of household debt, and says it looks like the market is about to go bust.
LOUIS CHRISTOPHER: It’s getting very close to that point. Certainly when we look at, say, our auction clearance rates which are a good leading indicator of a market, they’re at levels that we haven’t had since the last recession of the late ’80s, early ’90s. So we’re bordering on it, no doubt about it.
BEN KNIGHT: But not everyone agrees with that.
Rod Cornish is the Macquarie Bank’s Head of Property Research.
ROD CORNISH: You have to remember in Melbourne, for the last 23 years, 19 of those years you’ve had at least one quarter of negative house price growth. We certainly look at the quarterly numbers, the annual numbers is what we really look at, because you have to have very sustained quarterly falls to be extremely concerned, but certainly these numbers are weak.
BEN KNIGHT: But the numbers vary depending on where you get them from. While APM shows a drop in Melbourne of 13 per cent, figures from the Real Estate Institute of Victoria show a drop of just point two of a per cent over the same period. And in Sydney, APM has the median house price down from 500,000 to 460,000, while its competitor, Residex, has it up at 520,000.
The difference is confusing for analysts and the industry.
Rowan Kelly is the President of the Real Estate Institute of New South Wales.
ROWAN KELLY: Well it does seem the two major researchers have got quite varying analyses of the Sydney marketplace. So it is a little bit concerning.
MARK COLVIN: That report prepared by Ben Knight.
Hi Kay,
Thanks for posting that article. Interesting, but I guess not surprising. I often have a sticky at http://www.realestate.com.au, as well as flick through MPG and my local paper, only to be amazed at how far properties prices have actually come down. It is sad, but then, it has to rain sometime, doesn’t it?? Things will turn around again but it may not be for a long time yet.
It’s a great time for FHO and those keen investors looking to pick up a bargain. I don’t share the “doom and gloom” of so many; sure it may not be a pretty picture right now, but things change, as they inevitably do (should).
Cheers,
Jo
Jo said : “but things change, as they inevitably do (should).”
and
“It’s a great time for FHO and those keen investors looking to pick up a bargain.”
At a time (of turmoil in the world) where, literally, anything can happen should one or shouldn’t one bother to be prepared for the worst to the best of one’s ability ?
Should one ignore the possibility of the worst possible sceanario happening and be on the lookout for bargains as ‘eventually’ (one would hope) things will turn around again or should one (just in case) clamp down the hatches ?
And, if one’s choice is to play defense, defense, defence, what form should that take ?
Jo ? Anyone else ?
Pisces
Hi Pisces,
I didn’t mean to make it sound like a perfect time to rub one’s hands together in glee, and be opportunistic in trying to gain from others misfortunes (i.e. decline in house price, thus losing money on the sale of their properties).
I just felt that, with the market being what it is, it would give those who normally could not enter it, an opportunity to get a foot in.
And yes, times do change, and they should. If things never changed, the world would cease to exist.
I meant no offense.
Jo
Pisces,
I see this market change as inevitable, really. It means prices are more affordable for all. I know that people say one should never sell, RE, but I also think the boom was a good time for people to sell underperformers in their portfolio and take that CG to invest in “better” performers, however that is defined by the investor. I bet many wished they had sold earlier, instread of now having to be more “realistic” about the price they put on their property.
For any investor or homebuyer, this has to be good news. People have made great CG over the past few years, and even those selling are probably still ahead from what prices were in 1997- in some ways, everyone wins.
As to battening down the hatches, as an investor, I think it’s a good time to get in and buy- and hold!! Flipping as a *generalised* strategy is probably dead- although some who are more savvy (and play with risk) canprobably still do it. I think that for those who are financially disadvantaged, they may now be able to afford more traditional forms of finance, instead of being wrapped.
So much for doom and gloom :o) I think the cooling of the market will help many.
kay henry
Offense ? What are you talking about Jo.
That’s not how I perceived your post.I just thought it a good time to add on to both Kay’s and your post to ask a serious question.
I posed the question before and no-one responded.
I get a lot of e-zines which all talk doom and gloom.
And the logic they provide cannot just be ignored or dismissed with the wave of a hand.
I am really in two minds. To go full out (presently all cashed up) or load up with some more gold and wait.
Regards,
Pisces
Whewwwwwww (sigh of relief)………..[blush2]
Sorry Pisces, was petrified of another attack. I seem to be a good target at the moment, and I was really worried I had upset you in some way.
Thanks for the reassurance.
BTW, I am in the same boat, I am on the look out for another IP, but am sitting back a little at the moment to see how things weather out.
Cheers, [biggrin]
Jo
I answered ya, Pisces [blush2]
Pisces, wouldn’t you just be buying constantly as part of your strategy? Why wait? The market is so soft now that it’s a buyer’s market. Perferct timing, I reckon.
I remember a few months ago- at more peakish boom time, investors were saying people were mad to buy now, and they wouldn’t be buying for years. I think the worm has turned.
Pisces, will you be looking at pozz or neg geared properties with your current gold?
kay henry
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