Hi,
Just letting you know that RP Data / Rismark released has just
released its July national house price index.Overall, capital city house prices fell by 0.6% for the month and are
now down 2.9% for the year.See how prices in your capital city performed:
https://www.propertyinvesting.com/weekly-update/31-08-2011Reading the accompanying commentary, low consumer confidence is
attributed for the malaise in buyer activity; its now taking 55 days
days to sell a property (up from 45 days for the same time last year),
and sellers need to accept a bigger discount (7.2% up from 5.7%).The silver lining is this comment by Christopher Joyce – Rismark's
international economist:"If rates to remain on hold, or begin to fall, we would expect to see
Australia's housing market find a base and begin to generate capital
gains again. If the RBA has really come to the end of its tightening
cycle… 2011-12 will likely be judged one of the best buying windows
seen in quite some time."Food for thought.
– Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
macrobusiness has some graphs
http://www.macrobusiness.com.au/2011/08/housing-fall-accelerates/I think Joyce's comments on the RBA's tightening cycle are a little bit irrelevant. If the RBA does lower rates, what guarantee is there that the banks will follow? Credit is becoming harder to obtain for our lenders:
The article also suggests that our banks lending ability is affected by local house prices.
'The big four retail banks are also starting to look to their staffing levels as the housing market softens.'
Seems to me that without a prompt credit injection, at rates borrowers can afford, the market will continue to soften or begin to crash. Question is, where does that credit injection come from?
I'm surprised to see that they're reporting on Canberra growing at that rate. From where I stand, the market seems a bit flat – but I wouldn't be surprised if things pick up within the next few months.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:I'm surprised to see that they're reporting on Canberra growing at that rate. From where I stand, the market seems a bit flat – but I wouldn't be surprised if things pick up within the next few months.Cheers
Jamie
Canberra seems very up and down – I think because it is a small sample.
I think this property observer article is very relevant to Canberra (even though it claims not to be – the amount of building that has happened over the past couple of years here is massive). And, there are still PS wages to rely on.
ummester wrote:Seems to me that without a prompt credit injection, at rates borrowers can afford, the market will continue to soften or begin to crash. Question is, where does that credit injection come from?I tend to agree with most of what you say Unmester, however, credit or should I say easy credit is the primary cause of global woes. The last thing we need is more credit in a credit fuelled crises. The sooner we deleverage and take our medicine the sooner we can get on with rebuilding the new economies.
It’s not going to be pretty I’m afraid.
Jack
JackFlash wrote:ummester wrote:Seems to me that without a prompt credit injection, at rates borrowers can afford, the market will continue to soften or begin to crash. Question is, where does that credit injection come from?I tend to agree with most of what you say Unmester, however, credit or should I say easy credit is the primary cause of global woes. The last thing we need is more credit in a credit fuelled crises. The sooner we deleverage and take our medicine the sooner we can get on with rebuilding the new economies. It's not going to be pretty I'm afraid. Jack
Of course we have to take our medicine – why do you think I haven't brought a house yet:)
Just saying that a credit injection is the only thing that will stop the market from continuing to soften ATM – never said it was a good idea.
ummester wrote:Just saying that a credit injection is the only thing that will stop the market from continuing to soften ATM – never said it was a good idea.The FEDs with their massive QE programs and near zero interest rates haven’t made any difference to the US property markets. Our problem is that we are maxed out on credit. Australian private debt stands at around $1.2 trillion. 60% of that is supposedly residential property debt which is funded by short term international funding. One of the big criticisms in the US is banks using short term borrowings to fund long term mortgages.
Stopping the market from softening is not desirable anyway. That’s how markets should work.
Jack
JackFlash wrote:The FEDs with their massive QE programs and near zero interest rates haven't made any difference to the US property markets. Our problem is that we are maxed out on credit. Australian private debt stands at around $1.2 trillion. 60% of that is supposedly residential property debt which is funded by short term international funding. One of the big criticisms in the US is banks using short term borrowings to fund long term mortgages. Stopping the market from softening is not desirable anyway. That's how markets should work. JackDifference as I see it is that American confidence in the housing sector is shot. It isn't shot here yet. Just look at half the posts on this forum.
Don't get me wrong, I'm not disagreeing with your sentiment. I just think that there is still some confidence left with Aussie house vendors and investors. A cash injection now could hieghten that confidence for a time and scare some sideline buyers into acting. It will not solve the problem long term.
No cash injection and by the middle of next year I'd wager there will be no confidence in our housing market at all. BBs will be selling en' masse to try and get some retirement money. This will make rent very tight in some areas (not all) and the banks will require sunbstantial deposits to offset future falls. Likely the RBA will cut rates and the banks may meet them half way. Shouldn't stop property from sliding though. I think time is fast running out for a cash injection to have any effect on confidence.
ummester wrote:Difference as I see it is that American confidence in the housing sector is shot. It isn't shot here yet.Yes it is. It’s in the declining house prices, the doubling of properties for sale and the low turnover.
Anyone with half a clue knows that this is something different…. you can almost feel it.
Jack
JackFlash wrote:ummester wrote:Difference as I see it is that American confidence in the housing sector is shot. It isn't shot here yet.Yes it is. It's in the declining house prices, the doubling of properties for sale and the low turnover. Anyone with half a clue knows that this is something different…. you can almost feel it. Jack
Of course it's something different – it's the downside of a second peak. In shares that always signifies time to get out. Housing is less liquid than shares though. It's still time to get out but the effects are going to take a while to play out.
Further, unlike the first slide in 2007/2008, I agree with you that sentiment is a lot worse now. It could be the big slide down but it also could not.
All I am saying is that no-one should count their chickens before they hatch. I've been watching, researching and saving for the time to buy a house in Australia for my family since 2007 and I know it isn't that time yet. I'm sure we will know by the middle of next year exactly how things are going to play out.
Bears are not too different to bulls in the end, you know? We come from opposite ends of the economic spectrum on a given asset class but each always tries to positively re-enforce their own POV and prophesise boom or bust before it occurs. Human nature I guess. I'm with your POV – I hope you are right but I think I have grown to be a bit less anxious with my predictions.
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