The battle rages on

The battle for the hearts and mind of who’s telling the truth about housing prices in Australia rages on. In the latest installment SQM research’s Louis Christopher has returned serve to Michael Matusik via SQM’s newsletter.

I have talked Mr Matusik previously, he is a housing bull , turned bear, who now seems to flip-flop between the two as the housing columnist for the courier mail.

Mr Christopher seems to have taken offence to an article written by Mr Matusik over at Jonathan Chancellor’s latest venture

It is always lovely when someone else in the industry gets their knickers in a knot about something we have done or said and most of the time we are flattered that we have attracted such attention.

For a long time we’ve been sought by the media to a lessor or greater extent based on the notion that we are TELLING THE TRUTH, which we suppose must outrage most of those spruiker analysts, vying for some pro-property coverage. It must be disappointing for them that the Australian public is becoming increasingly uninterested in hearing a biased positive spin on a falling housing market.

Last week, our regular Most Discounted Properties List also copped a bit of flak, with a particular commentator lashing out over the fact that the top ten most discounted properties supposedly aren’t in mainstream areas and therefore our list isn’t a good reflection of the current market. The commentator, Michael Matusik, went on to suggest that we release this list in an attempt to draw mainstream publicity and implied that any ‘serious analyst’ would leave out certain outliers in the list.

You can have a read of the article here –

Wisdom in selling in a buyer’s market – 15th June 2011

On this note we would just like to point out that this list is compiled based on truthful data. It would be untruthful for us to spin ten properties that were in more commonly known areas just because they would be of better use to our consumers, and brand them as the top ten most discounted properties around the nation. Our list is a raw reflection of the data. It is not supposed to be a specific indication of the current market, even if it does from time to time reveal similar results to our forecasts. This point was made directly and privately to Michael Matusik many weeks ago, whom, it seems has decided he wants to get publicly personal with us. In any case, what this Queensland ‘analyst’ has failed to mention is that indeed, many high quality properties close to the CBD do regularly make the list.

In the same article, this commentator went on, asserting that “asking prices” have been declining rather than actual prices declining. It will never cease to amaze us what angle will be used to ensure that an optimistic assessment is given of the housing market. And when you can see ACTUAL prices falling, that really does mean there are home owners out there selling at a loss. Not all of them of course, because many would have bought many years ago. But nevertheless, there are MANY owners sitting on losses. Put it this way, I would not like to have been a first home buyer purchasing on the Gold Coast in 2009. We would suggest most of these buyers are facing LOSSES right now.

I know this sort of drama is probably good for publicity for the companies involved and is sure to escalate as the market’s troubles continue. However,  in my opinion, this once again highlights the bizarre situation that Australia finds itself in where the value of the largest asset class in the country is a play thing for commercial interests. As I have suggested previously it is time that the ABS invested in creating its own hedonic index so that all Australians, the government and the RBA had a truly independent index of our national wealth to better inform judgements on personal and national economic decisions.

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Comments

    • From that article, I would say CJ is following MB with close attention (and reading the comments).

    • “I have also heard on the grapevine that the venture isn’t going so well as visitor numbers are much less than estimated. Hope he didn’t invest to much in that project.”

      Quite the contrary.

      There is no more a just outcome than someone who was involved and who promoted the housing quango losing everything from a startup at the peak of said quango.

      I feel more pity for a raft of 24 year years pressured into buying property from parents, media and government incentives than Jonathan Chancellor having to shift from a house in Longueville and driving a Merc, to a house in St Clair and driving a Hydundai.

      • I agree with Rusty Penny…let his (one of the worst spruikers) site crash the way the market is about to crash…although I presume Smoking Gun was being tongue and cheek his comment thast he hoped he hadnt invested too much in it.

    • Torchwood1979

      I think the Property Observer photo of CJ is enough to scare anyone away. Yikes!

    • “For the time being, however, the RBA’s jawboning has paid off (a subtle pun in this sentence for the central bank enthusiasts). That is, its so-called “open-mouth operations” have had the effect of de facto rate hikes.”
      .
      Not sh!t, Sherlock!
      .
      I am just wondering why it took so long for the bullhawk to come to this conclusion – the one that MB has been screaming for 6 months now. Maybe he should just go easy on the navel gazing, mouth-breathing ego trips and read up MB more frequently.

    • Can’t be sure of exact figures, but it looks like PO receives about 1/10th the daily traffic of MB, and Joye’s blog gets about 1/8th of PO, using publicly available data.

      YMMV. 😀

    • Torchwood1979

      Agreed. I want facts, not spruik and spin. SQM are the most clear and factual when it comes to their output and hence the ones I’m more inclined to trust.

      On that note, I’ve got to convince the Wife to spend a few $$$ on an SQM discounting report for the three postcodes we’re looking at. I need to convince her that spending cash on quality data is a good investment for deciding when and where to buy. Plus it could give us more bargaining power when it comes to negotiating with vendors.

  1. I never knew i got so much airtime on your blogspot…thanks.

    Given you only covered Louis’s side of the equation – here is what I wrote on my matusik missive site that got LC obviously a bit upset.

    Also, by the way the Courier Mail places no editorial pressure on me at all and if reader took the time to follow what I write then they would know that I haven’t swapped sides – i.e. bear to bull, but outline that certain circumstances have changed…if someone would like to contact me directly then I would be happy to provide our reasoned views…[email protected]

    Cheers

    Michael

    It has been kind of fun sitting on the sidelines, watching the various residential property data houses bicker over who is correct, who got the biggest headline or the most media coverage. Heck, some even now boast about how much press they are getting. I thought having celebrity cooks was scraping the bottom of the barrel, but now we have big shot economists and property commentators to boot. Is there no end to this celebrity cult?

    Now let’s clear the air before I go much further. Residential asking prices are falling. We stated they would and that they could fall by as much as 5% to 8% this calendar year, maybe more in Queensland. They might fall even further, but that is dependent on what happens with interest rates, employment, supply and confidence. How baby boomers and recent first home buyers act (and react) in the near future in also important. Assuming, and maybe it is a big assumption, that the worst doesn’t eventuate, then the housing cycle will right itself and, over time, the declines in asking prices will be regained.

    Note the emphasis on asking prices. Extremely few sellers are making an actual loss on their resale. They are getting more than they paid for it – in terms of purchase price and all hard costs. What is attracting all the media hype is the difference between what a vendor wants for a property (nearly always inflated, if you ask me), and what the market is prepared to pay. This happens in a buyer’s market, when the amount of property listed for sale is greater than the demand. It happens in every industry. Heck, I have never paid full price – outside of basic staples – for anything.

    Property is an interesting investment class. Yes, I subscribe to the notion that housing should be a home first, and a means of accumulating wealth second, but under Australia’s current taxation laws, it makes financial sense to try to maximise the capital growth of your home. Most do these days by renovating, living in it for a period time, and moving on – all of which is tax-free. But home owners only really like doing this when it’s a seller’s market. Statistically, this makes little sense at all.

    When prices are rising, sellers will happily sell their home for more than they expect, only to buy in the same market and pay more (than the vendor expects) for someone else’s house. Now most will sell and move because they want something better (or different) than what they have already. The data shows that in a seller’s market most sellers will pay more for their next home than they actually made from the one they just sold. But I suppose they did have a “win” after all – i.e. they got more for their house than they expected.

    Now, reverse the situation – a seller in a buyer’s market is reluctant to discount their home to the extent needed to make a relatively quick sale. (Remember, my friends, a successful real estate agent gets the vendor a quick sale, not necessarily the highest price.) Doing such is perceived as a “loss” to the seller, though in most cases it actually isn’t a real loss at all. Yet in a buyer’s market it is in their best interest to sell quickly. Why? Because they will be buying in the same market, and the statistics show that if they discount appropriately and sell quickly, they can often gain more than they lost when buying again.

    Most trade property way too late in the cycle. Now, despite what we hear, is a great time to upgrade. You might be surprised at how much you can actually save by doing so now.

    Now back to our property celebs. If you are going to run these silly lists outlining the most discounted properties on the market, do some real homework first. And in particular, stopping using these examples as the means to judge the overall health of a city or region’s housing market. The happenings on South Stradbroke Island or the listed price drops of a grossly over-priced bit of dirt wedged between a quarry, the M1 and a major arterial road, have little relevance to what is happening across Brisbane or the Gold Coast.

    If I wanted to get some media coverage on a “fringe” property, I, too, would milk the system in a similar way. You should be quarantining these listings as “out-of-line”. A serious analyst would.

    Mainstream asking prices, by the way, are not being discounted by 30% to 50%. What is taking place are the usual price negotiations that occur during every buyer’s market phase of the property cycle.

    How about you guys start using some real practical examples – pick some mainstream properties, with vendors who are realistic yet not distressed (as only a small percentage really are), and share with us your findings. In Brisbane you will find discounting of up to 10%, with many sellers having made up slightly more than they lost on their next purchase and, in real terms, very few being left out-of-pocket.

    But that won’t get you much media coverage will it? Nor a gig on Channel 7’s Sunrise or the ABC’s Lateline Business. Let alone over a week as the top-billing article on Fairfax’s Domain.com.au.