I invite you to read this:

http://www.smh.com.au/news/national/coughs-and-splutters/2008/06/27/1214472770918.html?page=fullpage#contentSwap2

And also this one for our market:

http://www.smh.com.au/news/national/house-prices-falling-and-spreading/2008/06/27/1214472770814.html

IT COULD be a warning sign, or maybe just a blip. Property sales are flashing a signal that the fall in Sydney house prices will not be limited to the city's west.

An analysis of 2008 sales reveals that the great Sydney equation – take property, mix with water views, and you cannot go wrong – could be breaking down.

Even at Bondi, where prices have jumped 12.6 per cent in the past four years, the median price has fallen 1.6 per cent this year after 42 sales, figures from Australian Property Monitors show.

At Avoca Beach on the Central Coast, 115 houses have changed hands this year for a median price of $546,000 – 5 per cent lower than last year's.

In the nearby holiday spot of MacMasters Beach, median sale prices have fallen 15.6 per cent. A few falls do not necessarily make a trend. But property insiders are warning there is little confidence in a market rocked by rising interest rates, fuel prices and a skittish stockmarket.

"Everyone is sitting on their hands," said Kim Quick, a property valuer at Herron Todd White.

The AMP Capital Investors chief economist, Shane Oliver, warned that Sydney property was about 20 per cent over-valued.

Property prices are tumbling in the US and parts of Britain, and Australian house prices are even more expensive in comparison.

In the US the ratio of annual income to house prices is about 3:1. In Australia it is about 6:1.

"I think the weakness we are seeing out west will start to spread to the better suburbs," DrOliver said.

"It wouldn't surprise me if they came off about 10 per cent over the next 12 months, and that fall being widespread."

In Newport, on the northern beaches, 163 houses have been sold this year, the most recent figures from Australian Property Monitors show. This year's median house price has been 2.2per cent lower than last year's.

Real estate agents in some Sydney beachside suburbs say the local downturn is little more than a quirk. Water views will always generate plenty of interest.

In Tamarama, tucked between Bondi and Bronte, a house in Thompson Street sold for a record $10million this week.

The principal at Raine & Horne Palm Beach, Glenn Lee, said: "What we're seeing now is a patchy market in some sectors and strength in others.

"With the premium properties, these are sophisticated players who are simply waiting for the right place to appear." The agency is listing a waterfront house in Newport at $1.85 million, after it failed to sell at an auction with a reserve price of more than $2million.

At the top end of the market, in Palm Beach, 58 houses have been sold for 5.6 per cent less than the median price last year.

The fall comes after a 62 per cent jump in the median house price, to $2.55million, in the past four years.

BATTLERS in outerlying suburbs are being hit the hardest by rising fuel prices, as their distance from the city leaves them little option in curbing fuel use, an economist says.

Westpac senior economist Matthew Hassan says the impact of the latest round of fuel hikes had left two distinct groups of households – those that can and are cutting back on fuel consumption and those that can't.

Mr Hassan says the second group is facing a "fuel-constrained" world in which they have less to spend on other household items as their petrol bill increases.

Australians who live in outerlying suburbs are the among the hardest hit, relying on cars to get to work, and travelling further than people who live in the inner suburbs.

"When you think about those most likely to be affected by high fuel prices, they'll be households that are already relatively stretched financially that are living in outer suburbs where they don't have the option to use public transport," he said.

Mr Hassan said fuel-constrained households were among the most severely affected by higher interest rates, a weak housing market and rising food prices.

Mortgage defaults telling

Higher petrol prices could be the straw that breaks the backs of people struggling with their mortgages.

Data released yesterday by Moody's showed that it’s battlers living in outerlying, commuter suburbs that are falling behind in their mortgages.

According to Moody’s, Australia's top five suburbs for mortgage delinquencies were Paramatta, Liverpool, Canterbury and other western and south-western suburbs of Sydney.

"They don't have the option to cut back on their consumption of fuel," Mr Hassan said.

"There facing other pressures from other parts of their finances – in particular from interest rates and quite clearly are feeling the pinch from petrol up around $1.50 a litre."

Petrol prices have shot up in recent weeks as world oil prices hit record highs close to $US140 a barrel.

Squeezed from all angles

Mr Hassan said it wasn't surprising the surge in price at the pump was causing angst amongst households struggling to keep up.

"There is an exposed segment that's been squeezed from all sides, whether it's the weak housing market, whether it's interest rates, whether it's fuel prices.

"That's why it feels a lot worse than it appears to be in terms of the total numbers," Mr Hassan said.

Data released by Westpac showed although household spending on petrol remained around 3 per cent, households were buying much less fuel.

While spending on fuel has risen to $16.80 a week, per capita fuel consumption has slipped to 12.93 litres a week, Mr Hassan said.

Pain on the road ahead

Mr Hassan says there is still “quite a way” Australians can go in terms of reducing consumption of fuel.

"If you think about 2007 for example, we had record vehicle sales last year with what had been a major ramp up in the cost of fuel," he said.

Mr Hassan said consumers would reduce their fuel consumption even further as petrol prices go higher this year.

"I think we'll see that over the course of this year when people really start to reconsider … their overall usage of fuel."

Despite pain at the pump, Mr Hassan said fuel prices would not be the main driver of households in deteriorating arrears.

"Clearly there’s a segment that is going to find it very difficult this year, and fuel is only going to part of the problem of making ends meet.

"Interest rates will be the dominant driver in terms of arrears and bankruptcies, which are clearly going to start to rise to some extent."

http://www.news.com.au/business/money/story/0,25479,23877696-5016110,00.html

Property becomes an investment turn-off

By Nicki Bourlioufas June 17, 2008 12:40pm

Well said!

I guess the people posting here are just hoping no one read your posts otherwise they`ll lose money.

Somewhat like NZ real estate blackmailed the media the other day. They don`t want people to know about the crash.

And  HOW / WHERE do you find agricultural land ? I`m interested in that too.

Thanks

I wish you the best mate, really. From what you say it sounds like a great deal you found. But for many others out there, mothers and fathers with children to look after, the mortgage nightmare is just going to get worse if oil keep rising, because it will push up inflation and the RBA won`t have a choice but to rise again the rates.

if you think that a 600 sqm of land is worth $200,000 (which is about 4 times the average Australian income) is cheap then, any comment is useless.

If you are saying that 30 years are not too much to wait then I agree with you, by or before 2038 people will see higher prices more than likely.

And regarding my $10 Millions example: is not what every investor and real estate agent would like as scenario?

well, how about "shill bidding" at some auctions?

Friends of the seller or of the realestate agent who offer fake bids just to show more interest in properties?

I should search a news about this, it was found to be popular in Sydney.

I disagree, I have been dealing with lots of agents and everytime there is an open inspection they claim there is already an offer on the house, sometimes even 2 !!

Then 2 months later the house is till there unsold and at a cheaper price!

And this is just one of their multi-lies-strategies.