As Houses and Holes points out this morning, jawboning the RBA is an increasing past time. But not even my august blogging companion fathomed how suddenly widespread it has become. And it seems the shift is being driven by the Murdoch Press.
A few months ago News limited’s Courier Mail would happily produce articles like this:
The median house price in Brisbane is tipped to hit $1 million within seven years. The Gold Coast will follow in 2025 and the Sunshine Coast four years after that. The projections are based on a detailed suburb-by-suburb analysis of the changes in values over the past five years by the Real Estate Institute of Queensland.
Currently, just five of Brisbane’s 138 suburbs have a median price of $1 million-plus: Ascot, Hamilton, Pullenvale, St Lucia and New Farm. But the startling results show that by the end of this decade, more than three-quarters – 105 suburbs – will carry a seven-figure price tag.
And there will not be a single suburb in Brisbane, the Gold or Sunshine coasts with a median value of under $500,000.
However, something has happened. I have no idea what or why exactly it has occurred, but something has definitely happened. A switch thrown, a cog turned , a wheel spun! I could mix metaphors all day but there is little point. Something has definitely changed at the editing desk.
Just check this out from the Courier Mail Sunday edition:
Brisbane’s real estate market has slumped to a 10-year low. While real estate commentators are calling the market “subdued” and predicting more “price corrections”, the figures tell a more dramatic story. According to the PRDnationwide Brisbane Highlight Report released last week, the number of sales was down 28 per cent for the last half of last year compared with the same period in 2009.
The median price had increased only 3.6 per cent, up $18,705 to $538,705.
PRDnationwide research analyst Josh Brown said settled transactions over the most recent period had softened considerably from the incentive-driven half year ending December to register 6456 house sales. The year before it was 8912. The number of unit sales dropped from 4153 to 2535 – again the lowest number of sales in a decade.
“This not only represents the lowest level of sales activity in over 10 years but also 1345 transactions below the 10-year average of 3880 sales per six-month period,” Mr Brown said.
But there is more. How about an attack on a sacred cow:
The supply of houses in Australia is “around equilibrium”, although dwellings are hugely overvalued, a property analyst says. Institute of Actuaries Australia fellow Anthony Street is bucking the view of many in the sector on supply, saying a property bubble will be averted if prices remain stable. While the property industry and banks talk about a shortfall of between 160,000 to 200,000 houses nationally, Mr Street says until recently Australia had more than enough homes to go around.
“There isn’t the massive undersupply that a lot of people in the property market would want you to think but there isn’t a massive oversupply either,” the former Macquarie real estate securities funds manager said.
“As more and more people moved out of home and the number of people per dwelling decreased, that accounted for what seems like an oversupply, so I think it’s probably around equilibrium at the moment.”
Mr Street said there had been a fall in the average of 2.5 people per dwelling, down from three in the 1980s-90s. Extra housing would have been taken up by a reduction in the number of people per dwelling. But while the property industry expects the next national census to show an increase in the average amount of people under each roof, it’s been more than a year since the National Housing Supply Council released a report for the federal department of housing to assess the supply situation. From an economic investment perspective, house prices were at least 30 per cent overvalued, Mr Street said.
And let’s add a story about how doing anything with your house can go horribly wrong:
Eylece Franklin’s Brisbane home has turned into the ultimate money pit and she wants to warn others. What started as a $25,000 backyard makeover turned into a $100,000 renovation that cost another $60,000 in legal fees and will take another $160,000 to fix.
Her complaint to the Building Services Authority (BSA) is one of more than 11,000 expected to have been filed in the two years to the end of this financial year. Miss Franklin, of Paddington, in Brisbane’s inner-west, wants her story to be a warning to other homeowners after she took the matter to the Queensland Civil and Administrative Claims Tribunal and was awarded only $15,000.
The nightmare started when she hired a bricklayer to build the walls for a terraced garden.Miss Franklin said she was then talked into getting the underneath of her 1880s cottage bricked in and a cobblestone driveway installed. The extra work cost $99,000 and she is left with a downstairs area that floods when it rains, a window with a brick wall behind it and an unsafe upper deck because the bracing was removed while the downstairs patio was being altered and was not replaced.
So why after years of spruiking real estate, and more recently denying that any problems in real estate exist, has News Limited suddenly decided to go all out bearish on Queensland property ? This doesn’t appear to be a subtle shift, it is a downright 180 degree change of direction in the space of a weekend.
Heaven knows. H&H’s observation of The Australian’s jawboning conference hints that this is a New Limited play to convince the RBA to ease up on rates. But I’m not familiar enough with Murdoch operations to say whether or not this is a concerted shift in the stable. It is an editor’s job to stay abreast of public sentiment, especially in tabloid media, so perhaps they’re just reflecting the general mood.
I am not sure of the reason, but either way the psychological effect of the media giving up on the market must be very worrying for the property bulls. Jawboning by News Limited, now that is unexpected.