Housing falls accelerate

It will come as no surprise to regular MB readers that Australian house prices continued to slide in July, according to the latest RP Data-Rismark house price index.

On a seasonally adjusted basis prices fell 0.6% in July while the 0.2% June decline was revised lower to show a fall of 0.4%:

The raw figures showed a drop of 0.9% over the month with May’s drop of 0.6% revised to show a fall of 0.8%:

On an annual basis prices are down 3.2% seasonally adjusted while the raw figures show a drop of 3.4% with the drop from their respective peaks now 3.7% and 4.2% respectively. In real terms, however, prices are now down 6.2% on a seasonally adjusted basis while they are down 6.4% in raw terms:

By state, the break up is fascinating. Sydney is holding up but Melbourne looks on the way to joining Brisbane and Perth in a serious correction. First, seasonally adjusted.

And raw:

The longstanding relationship between house prices and monthly housing finance suggest we can expected falling prices for some time to come:

 

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Comments

  1. This is being printed in the MSM. The question now is will this create the fear needed to cause the crash, or will people brush it off and the property market continues to slide, stagnating till the next credit boom.

      • When the RSPT or another version of it is eventually implemented in the future, interest rates will fall. I don’t think any government at this time being Liberal/Labor has the balls to regulate the banks lending policies. This will cause further speculation in the property market and cheap credit will flood the market pushing prices up.

          • Honestly I wish I had the cash to jump in. I don’t see a full blown crash happening in Australia or at least Sydney, because in the end people need somewhere to live. In this market I would chase yield’s as I believe there will be little Capital gains as market sentiment is poor.

            People think they are being smart by holding off and renting at half the repayments (which is true) but when cheap credit arrives and everyone jumps back in the market, the vendor has the upper hand. While in this market I have the upper hand in negotiating.

            As I would be buying the property as an investment I would seek out properties on the market 100 days + that were purchased in 2007-2008. These are the desperate vendors who bought when credit was cheap and have not realised any capital gains and want to leave the market. If you do this right you can get 7%-8% yields in the Sydney market!!.

          • i wish you had the cash to jump in too georgie. then you could report back to us in 12 months time and tell how much money you lost.

          • “Honestly I wish I had the cash to jump in. I don’t see a full blown crash happening in Australia or at least Sydney, because in the end people need somewhere to live.”

            As oposed to other countries and cities where crash happened but people do NOT need somewhere to live?

          • “people need a place to live” gosh! haven’t heard anyone in the US say anything so stupid in a long time! enjoy your crash mate! by all means, jump in Georgie, every crash needs idiots to jump in early, try to catch the proverbial falling knife, and slice their hands all to hell!

          • Don’t forget your bandaids Georgie. You are in for a painful lesson. It’s “game over” for fiat currencies as we know them. The vulgar expansion of credit that has chased up house prices has come to an end (for our lifetimes at least). Buy now and one of two things will happen to you: 1) bankruptcy court at some point in the next decade, or; 2) debt slave for life.

        • How will the banks find the funding for this lending…Europe is falling apart and international credit markets are about to bust up Lehman style. Cheap credit in not guaranteed…we are reaching the end game.

          Employment is creeping up and likely to explode…so not as many potential buyers as there was in 2008.

          Government finance and credibility is shot – how can they get away with boosting the FHBG again without massive political upheaval

          • Georgie,

            More people can move into a house, this will free up supply. Land prices can collapse.(supply is being increased at the moment) And many other reasons Sydney house prices can drop.

          • *unemployment

            even despite all the funding pressures and say we do get cheap credit again, there is still I believe a structural shift away from debt (similar to post depression in 40’s/50’s) plus that inconvenient demographic time bomb of the baby boomers retiring…

            ill take my 6.5% Ubank account atm

      • How disgusting is the start to that article Adrian…

        “CAPITAL city house prices continued to fall in July but a turning point may not be far off as market sentiment shifts toward the next move in interest rates being lower, property analysts RP-Data Rismark said today.”

        So looking at the bottom graph – I cant believe anyone could legally and honestly claim we are about to see a change of sentiment…the boom is over. Without interferance…national house prices will slide 40% until 2015-6

        • Joye is a real disgrace. The big issue for me is that the average Joe can be sucked in by this false reporting. I was shocked when two of my friends brought recently after I’d told them not to, and they cited an Age article. She’s about to stop work and have a baby and I can see things getting grim for them. We have regulation on Financial Advisers, but nothing stops this lot pushing their vested interests.

          • Hilarious the Joye has been demanding rate hikes all year and its still banging on about inflation. If Joye had his way the housing market would be in much worse shape today.

            Chris has an unusual relationship with the truth.

          • Anna Bligh on ABC radio last night “Why not buy a holiday apartment in Cairns, or invest in the go-ahead market in Gladstone.” I couldn’t believe what I was hearing.

          • “or invest in the go-ahead market in Gladstone.”

            I want property investors to stay the hell out of my hometown. The FIFO boom has barely begun and already the negative impact is occurring as the cost of a roof overhead – be it rented or bought – is rapidly escalating beyond the reach of the ordinary income earner here. That would be the majority of the area’s permanent population. A community cannot exist on resource sector workers alone.

            A co-worker of my wife took in a FIFO as a boarder. The company was providing him with an allowance of $700 per week for accomodation, plus he recieves a wage of approximately $150 000 per annum which he can draw on as well if need be. How the hell can any ordinary income earner – police officers, ambulence officers, fire officers, nurses, teachers, teacher aides, caretakers, cleaners, hospitality workers, retail workers, clerical workers, municipal workers – possibly compete with that sort of spending power as landlords and property vendors, their eyes wild with dollar signs, send prices to the moon? Property investrs can bugger off and Anna can go to hell as well!

          • Oh you have to be kidding! Anna Bligh is the last person you would want to take financial advice from if her management of state finances is anything to go by. And imagine if she said “Why not buy shares in BHP or Rio?”. Scandal! But tell people to financially hang themselves by buying units in Cairns and it’s all good!

      • “Australia’s housing market My interest rate hike predictions could be at a crucial inflexioncapitulation point,” said Chris Joye, an international economist at Rismark.
        .
        Fixed to highlight what Mr Joye left unsaid.

    • if you are a highly leveraged household with little equity or invesrtor with an interest only loan this already is a crash.

      • I agree with this GB, what i meant before when I said that I wish I had the cash I meant only leveraging at around 40% and paying the other 60% out of pocket. Buying a property now at the usual 10% deposit poses more risk than going to the casino. Buying a property with that much capital is a guaranteed loss in this market.

        • Georgie,
          People also need somewhere to live in Ireland and the USA, but that didn’t support their house prices from falling sharply.

          I agree with Joye’s analysis in one respect: we haven’t (yet) seen substantial falls in home prices in Australia.

          Why rush?

          • NOT A ''TRUE BELIEVER''

            Unless you live on the Gold or Central Coast, Perth, Adelaide, Melbourne or many other suburbs and regions with thousands of discounted empty houses while vendors are still wishing for a miracle. NOT convinced ?
            http://www.refindhouseprices.com

        • Georgie,

          Deploying 60% equity on this asset class would be a massive dud investment.

          Unlevered yields are still below the cost of debt so your cash on cash yield would be appalling relative to other asset classes (with lower risk).

        • im only mucking around above about wanting to see you lose money georgie, no hard feelings. My experience is that trying to pick bottoms or catch falling knives is futile. look at all the heros that thought the stock market was cheap after it fell 10%-20%. it ended up falling 50%. thats what happens in bear markets, you are almost always suprised by how low prices can and do actually go. Property is definately in a bear market.

    • or will people brush it off and the property market continues to slide, stagnating till the next credit boom.
      I hope they’re patient!

  2. Witchsmeller Pursuivant

    But they’ve told us there’s a shortage! There is a shortage! It’s driven by fundamentals and not simply credit growth! WAAAAAAAHHHHHHH

  3. Sigh

    Way to go Canberra, you bunch of overfed, overpaid, overcompensated desk jockeys. When Abbott gets in, I hope he goes spanish inquisition on all you glorified welfare recipients.

    Note: I’m Canberra….

      • I had the same freaking response. Up 1.9% in Canberra! Holy cow. Also Canberran… but yes, the Government could change at any time and then things might look different…

        • I’m sure you guys would agree that Canberra is now way, way, way overbuilt?

          I left a few years ago and every time i return i am staggered by the amount of building going on down there,

          • Yes, plenty of building happening all around the place. All things considered though, I’m looking to GTFO of Canberra and so don’t really care where house prices go here.

        • endrortsonhousing

          Don’t believe that the increase in median in Canberra means that the housing mkt here is on the rise.

          I have been following the auction clearance rates in Canberra and they have been in the toilet for months – and that certainly didn’t change in the last couple of months.

          I suspect that rise in Canberra means only that the smart money at the top end of town is GTFO of the market first, even though that means selling for less than last years prices. i.e. while premium suburb listings were as rare as hens teeth, now they are becoming much more common.

  4. This is a small flickering flame of hope. It’s starting to resemble a marketplace once again. This, you might recall, is where prices are set by buyers and sellers without government interference. How much longer before landlords are crying? How much longer before the economists call for “temporary, targeted and timely” stimulus? How much longer, I wonder, can the politicians resist the temptation to step in and “do something”?

    • No s*#t, Sherlock. Sorry, just had to say that.
      To answer your questions:

      Who is the mouthpiece for the landlords? We’ll have to ask him/her.

      It’ll happen daily.

      Definition of politician: megalomaniac whose job description is to “do something” (with other people’s money). So, I’ll give them 5 more minutes.

      • they will only do it if its politically profitable, what ratio of voters are landlords vs tenants…

        then how many prospective FHB’s think FHOG is to their benefit..

        I hold little hope

  5. It’s looking very bad for property investors. The market is sick as a dog. But just wait until you see the real estate propaganda machine come out in force now to spin the positive side of this news.

    There’s even a ‘proactive’ headline on SMH this morning claiming that most people think house prices will rise.

    http://www.theage.com.au/business/most-expect-house-prices-to-rise-over-five-years-20110830-1jk38.html#ixzz1WZ3e9jUj

    Not a chance. What will the property industry do in the face of this new reality? Why, what else, but attempt to spin their own reality!

    Demographer Bernard Salt was recorded recently at the Congress 2011 event, conspiring with big business and the real estate propaganda machine to create groups who would plant positive spin messages on the opinion pages of major newspapers, discussion forums, blogs, twitter other social media platforms. Mr Salt advocates that these groups should seek out and counter ‘extreme’ views. His property industry colleagues at the Congress 2011 event recommended broad PR campaigns aimed at fighting ‘negative’ sentiment in the real estate market (see below).

    On the Internet, nobody knows you’re a dog, or a paid property spruiker.

    Did you happen to notice recently, how in the comments section of any major property news article, among the majority of balanced and realistic posts, there’s always one or two jokers insisting everything is fine and house prices are just about to skyrocket through the roof and into the stratosphere once again. How likely is it that real people could be so stupid, to expect another boom at the peak of the largest real estate bubble this planet has ever known?

    Not very likely, is it? More than likely, these people are vested interest spruikers, paid to talk up the market.

    Tony

    • just read the article in the age

      “42 % of Australians believe that house prices will rise in the next year”

      this does not suprise me. when it comes to housing, australains are the most stupid people on the planet. The americans really did think house prices cant crash becuase they hadnt. But here in australia we had examples everywhere of why and how property markets crash and what did austrlians go and do as these property bubbles burst? leverage up even further into a property bubble and blow it bigger than the worst of them!

      • I dont think we should dismiss that statistic out of hand. That means that 56% of Australian’s believe that Australia’s housing prices will either stagnate or decline. Its powerful stuff, roughly 56% of people who would of previously bought into the propoganda have jumped off the bandwagon and may not buy a house until prices fall suffeciently for them to feel comfortable taking on that size mortgage.

        The results of “The Block” and the media attention around it have truly woken up the Australian public, there will always be the people who hang on as the ship sinks but it seems the majority is getting the message albeit slowly.

        I cant personally see this ending in anything else but a large crash, we have so many highly leveraged homeowners and investors who are currently watching their hard work paying off their mortgage dissappear. Investors on interest only will flee the market as soon as they wake up to reality and realise 3 investment properties on interest only was a horrible investment idea.

        All I know is if I was a Melbourne homeowner I wouldnt be too pleased watching 1.4% of the value of my home wiped out in the last 31 days.

          • “Did not respond”? Surely they would be included in the ‘yes’ group – this is the real estate industry after all πŸ™‚

            I’d like to see the results after today though. I wouldn’t expect a huge change, but any change would be interesting in terms of momentum.

          • I’m aware of that, I was merely using the 56% number for the sake of argument.

            Its quite a substantial change from what I could only imagine being 80%+ support for the idea that housing prices always rise.

            I was pointing out that it is a fundamental change in the psyche of Australian homebuyers, while holdouts remain they will adjust their expectations in turn as the situation goes from bad to worse for housing. Which is looking like it may occur sooner rather than later based upon the figures from this piece on MB.

        • I agree. Although it may have been intended as a spruiking piece, if one imagines what the results would have been 2 years ago (99% of people think property going to the moon forever), it in fact comes off as a rather sobering assessment of the negative sentiment in the current market.

          But really, without relating anything to historical data, the percentages reported are meaningless attempted spruik.

          • I agree GB…the willingness of people to delude themselevs in Australia is amazing. We have been told we are special by Swanny and so the sheeple believe it.

            I think Tarric also has a point though. Because from my experience, anyone that owns a home is very unlikely to think prices will fall. Its strange, but people cant distinguish between what they hope will happen adn what they actually (deep down) fear will happpen.

            I have seen this with my group of friends, where I have been known as the resident bear since 2007 and the ones that were willingness to listen and have kept informed of the matter are the renters. The ones that prefer to tune off are the home buyers.

            Which is ironic, as the home owners with massive debt should have the most incentive to be informed.

    • I have actually started to talk it up too! Much more fun to add weight to the carnage πŸ˜€

      • Let me guess – the same one who argues that you are better off buying a home in a ‘master plan’ development because you only pay stamp duty on the land, not the house, and therefore you immediately have on average $7000 more equity (mate)?

      • Well it was a nice gesture by the responsible minister to help promote the new product.
        Wonder what the take up has been?

  6. Rents are dead too. Just had notice that our tenants of almost 2 years are vacating. Looking at the market we won’t be raising our rent, quite possible decreasing it. This in a very well looked after place in an excellent suburb.

    • Ahh rents…the forgotten piece of information that the spruikers have ignored since 2008.

      The stangate nature of rents is the key message to get across. The spruikers have to straight out lie about rents rising, because the figures show exactly what Steve has claimed. Landlords cannot raise rents at the moment.

  7. I hope people realise that these annualised rates of falls are well and truly “up there” with the US, given their bubble has been deflating for some 4-5 years…

    Unless i’m wrong, but simple extrapolations based on data so far seem to be indicating exactly that…

    Anyone?

    • Melbourne annualizing -17% or thereabouts. Seen some 40-50% panic drops in good bayside suburbs recently.

        • Not bayside suburb but that studio apartment at Falls Creek going at no reserve auction for $30K is probably in the 40-50% drop range, if not more. Considering it can surely fetch over $10K in rent during a single ski season it is a bargain. I thought it would be a few years before I called a property in Aus a bargain. But couldn’t get past this one.

          • hmmm I don’t know. Visitor numbers are declining at an alarming rate. It’s now cheaper to ski NZ and they actually have snow.

            Annual maintenance costs on an alpine property can be extreme. The Huski development leaked like a sieve from day one amongst other design issues. Falls Creek is a ghost town as soon as the snow melts. It’s too far from major centers and they have failed to invest in summer sports. (mountain bike park Whistler/ Buller style).

            I’m betting in 5 years those people won’t feel like the got a bargain.

  8. Oh…and there was recently discussion here at MB, in various comments, on whether we are in the Denial or Fear stage of the Fourth Phase of the Bubble Chart.

    My vote is still for Denial: people still don’t raelise that it’s about ability to afford (ie. we are at Peak Debt) and Sentiment, ie. you can throw money at people and they won’t buy, because Faith has/is shifted away from what it used to be. Even low IRs will only cause dead-cat-bounces.

    Price now go down because they are going down: call if Deflationary Mindset.

    My 2c

  9. Did you notice how the MSM etc tend to “talk” up the market on Fridays? I guess this is to “help” auctions on weekend etc..

    • Well spotted Andy! I have noticed the gloomy news comes in thick and fast early in the week. I suppose they hope sheeple forget by Saturday auction time how bad the economy is really going

  10. There will be loads of “it’s different in Sydney” stuff going around. I get that from my family all the time.
    .
    Also get “it’s different in xxxx (our area)”
    .
    Funnily enough, the data supports this so far. And ironically, it could be the thing to stop any proposed government intervention until it is too late to be at all effective. The government may be looking at the numbers and thinking ‘oh, only down 3%, we can get away with that, keep an eye on it’. Sydney is masking the underlying weakness. That in itself may bring about a national recession. Which takes Sydney down with it….

    .
    My 3c

    • It would be interesting to see how many of those Sydney sales were to Chinese or foreign buyers.

      I’m saying this as it might be why Sydney is different? As for Canberra, it’s a town where the people have a guaranteed pay cheque and has the highest average income in the country…wonder how.

      Does anyone know if that data is kept? The FIRB does keep some, but I don’t know if we could get it.

      • +1
        Scuttlebutt keeps insisting that most +$1m sales in the Sydney market are to foreign buyers. I’m kinda surprised, given the AUD’s record highs.

        FIRB data would only capture sales that were reported to the FIRB, which I suspect is a minority.

        • In Feb my mate sold his Coogee apartment, (1.2M sale) to a Chinese lady, and the other property she was telling him she would buy was also sold to another Chinese person. Two in one day so I was just wondering. In his sale there was a FIRB approval for her so that’s why I asked.

  11. How is it that the market and AUD are able to shrug this off. Clearly, the trend is downwards and accelerating pointing to economic problems.

    Meanwhile, Bernake can simply make up an opinion that he thinks the economy will pickup in the next quarter (he says this every quarter) and the markets rally?

    Perhaps the short-term nature of most market transactions is to blame, particularly algo-traders. How else can a downward trend that is tracing the trends of already collapsed nations be followed by the market and AUD being up? Downwards trends are appearing all over the world in all sorts of indicators and yet the market rallies?

    • AUD is driven by our comparatively high interest rates (carry trade) and equity markets are just following whatever happens overseas (equity markets are driven by a ‘herd’ mentality, as fund managers just try to avoid being lower than benchmark rather than generate positive returns).

      Very little of the market action actually reflects our fundamentals.

    • The other side of AUD/USD is USD. Try thinking about it from the perspective of USD, rather than AUD.

  12. The Canberra Times is hailing the ACTs most awesome price increase. Obviously the mugs here believe that Gillard will be re-elected.

  13. Tom Piotrowski's Wig

    My local weekly rag reported RP DATA stats in their Real Estate section over the last 3 weeks that two leafy suburbs on Sydney’s North Shore have had median price drops of 10% in the last 12 months. With a median price of circa $1.5m in each, that is close to $3k a week in equity draining out under the floorboards. With a 20% deposit down on a pile bought this time last year 50% of the hard earneddeposit has vanished. Another 10% drop in the next 12 months and equity equals zero. Funny, I don’t see that mentioned too much in Bank or RE literature.

  14. I appreciate the sentiment in most comments, but really, where were you guys in 2008? Isn’t that the template for action right there? What democratically elected government would let this catastrophe progress all on it’s own? A juicy election-winning proposition is developing right before Gillard’s/Swan’s eyes. Watch them throw absolute gobloads of money at this ‘problem’ before election time in order to ‘save’ us. To quote the detestable Ken Henry – “Go early, go hard, go households.”

    • Friendship7, you’re right that the politicians will probably implement a similar plan as in 07/08, if prices keep falling.

      The qn is: are there enough *potential* FHBs left out there to support the market?

      Remember that they still have to (i) demonstrate a savings record (ii) obtain a deposit (save or beg family) and (iii) borrow most of the house cost, even with FHB benefits.

      • I think a lot of potential FHB’s are starting to see that all stimulus does is kick the can down the road, and lead to longer taxes in the long term as well.

        I know a few potential FHB’s currently renting – and they would not be in a position to buy even with a $20,000 government grant (given their incomes and the current price of the “low” end of the market)..

      • Why do you assume they’ll again try to suck in the FHB’s? They’ve already done that, and those suckers are the ones hurting the most, and therefore the ones most likely to vote for the Libs.

        So, it’ll need to be something that “helps out the struggling working family”, and which will also help out all other mortgage holders.

        Tax deductibility of mortgage payments, anyone?

          • Fume – you’re assuming a sensible policy response. What’s wrong with a poor working family having their cake and eating it too?

        • Tax deductibility of mortgage payments, anyone?

          And our “Return to surplus” government would afford that, how?

          Anyway, in the current environment there’s also the danger that too many households would use the tax breaks to just pay off their massive debt quicker rather than leverage up, which is what the government would need from a housing stimulus.

          The FHB boost works a treat because it gets those without the existing debt to take on extra debt for their first place. This drives prices up, giving existing owners equity and then kicking the wealth effect off.

          Hence tax deductibility wouldn’t have the same bang for buck as the FHB boost.

          • OK, good points about the effectiveness of FHB (similar to Steve Keen).

            But I just wonder how many new FHBs they can drag in? Maybe drop the “F” from FHB? That’d work, make it truly Ponzi-ish.

          • IMO the last FHOG boost brought so much demand forward that it would be less effective if they tried it now. At the height of the FHB madness in 2009, the FHB made up about half the market activity, now down to 15%.

    • Dunno, maybe the same democratically elected incompetent Government as the myriad of others worldwide who have tried and failed. It’s a phenomenon that you can’t and won’t stop……eventually.

    • The Gov can’t do that if we are going to be getting back to surplus (however unlikely it may be, even without any further stimulus)

    • So, if this is the same mob, we have a bunch of crooks show up at the RBA holding placards against interest rate rises every month? A fine nation we’ve become.

  15. rational investor

    working in Brisbane this week, there’s ads on morning tv for the 10k housing boost, I believe the ad said it was applicable for investors too, which implies it ie not exclusive to first home buyers…… oh oh.

    • That’s correct. The building boost includes investors. We’re yet to see data about what impact it will have on the market up here. Watch this space.

  16. Fantastic article & stats DS! I can barely contain my excitement that the disgusting housing bubble is finally deflating and affordability may actually be a possibility in the not too distant future.

  17. innocent bystander

    anecdote:
    it might be just a springtime blush, or some people just need somewhere to live but I was out house hunting last w/e in a couple of Perth locales for my next PPOR and I couldn’t believe that quite a few recent listings have gone under offer for what I consider to be top dollar, ie close to asking price after only being on the market 1 or 2 weeks. wtf?
    maybe they will get cold feet and pull out during settlement or not raise finance – did see a bit of that 3 to 6 months ago.

    • Mining bogans. They still have plenty of cash and the word around the crib room is now is the time to buy. Quite a few have bought recently.

      Plus they believe Perth is the best place on earth. I can see why a bogan would think that.

        • In saying that, most of them are using the cheaper prices as a way of moving into more desirable suburbs. You know, away from non-mining bogans. Just about every one of them has sweated on the sale of their previous abode.

          For investment properties they’re looking at Queensland. I kid you not.

  18. My local spruiker/RE agent sent out a flyer the other day citing “10 reasons why property is still a good buy”. Now given that these parasites for the last decade had to do nothing except stand out the front of a place and watch the hordes fight to get hold of it, does this not smack a little of panic?

    My view on the Sydney market is a bit mixed. I’d like to see it fall, only so that this nonsense can be put to bed for good, and everyone walks away with a salient lesson on the value of money, debt and such things. On the other hand, I see a little more life yet in the market, especially in the Inner West and the apartment market targeting Chinese buyers.

    • I don’t understand how Sydney can be so dislocated from the other Capital Cities.

      Are the Chinese really buying in bulk? Their exchange rate exposure on property must be massive.

      • Yes, but I think a lot of investors see it as having the best “fundamentals”, in that wages are higher and rental stock is traditionally lower than other capitals. I live in a reasonably large complex, where nearly all new sales are targeted to Mandarin speaking Chinese (can’t say if they are locals or not). The local agent has 2 of his 4 staff that speak Mandarin. I don’t want to turn this into a foreigner bash, as I can’t be certain that the buyers are foreigners, but my local observations are backed up by High Rise Harry who reckons Chinese buyers are keeping him afloat.

      • The use of medians can often mask price falls in places like Sydney, where the top end of the market often unravels first and then it cascades down the chain.

      • Yes I cannot believe the amount of Chinese still investing and building here in Melbourne. Our firm (Architects) has never been so busy with residential projects here. So many here in the Eastern Suburbs and even proposed 300 house developments out in the West etc… Its like a game of Hungry Hungry Hippo at the moment, except its a land/property grab and not coloured balls πŸ˜€

        Some seriously crazy money being thrown around even now! I dont get it, are they to us what the Japanese were in the 80’s?

    • Originally listed at $639k and finally sold for $110k less which is only $9k more than it was bought for in 2006

      or about 0.5% capital growth per year

  19. Prediction : Property will fall by about 10% by early 2012, then leading up to the next Federal election, Gillard and Swan will announce ‘protectionist’ policies and ‘free’ money for every sector (including real estate).

    Get ready for First Home Owners Grants II for anyone willing to become a mortgage slave. Funded of course, by a HUGE budget deficit. Yay!

  20. I believe there’s a mistake in the fourth image that shows seasonally adjusted figures. For Perth, it lists the figure for Feb 2011 as 0.7%. This didn’t seem right to me – I couldn’t remember seeing a positive figure for Perth in well over a year. So I checked the figure on rpdata.com and the correct value seems to be -0.4% (see http://www.rpdata.com/images/stories/content/pressreleases/rp_data_rismark_home_value_index_apr_30_2011.pdf). Not that it matters much if 6 out of 7 figures are negative, or if 7 out of 7 are negative – the trend is quite clear!

    Also, the next image that is labelled “raw” seems to actually be showing seasonally adjusted quarterly figures.

    • Actually, it looks like some other numbers in that chart also don’t match up with the PDFs on the RP Data web site. Not sure if I’m just reading things wrong, but I’ll go through it in more detail when I have some more time.

  21. Kia ora from NZ, it’s interesting to read your comments…your property market looks screwed…it’s like the Titanic sinking and the two guys on lookout have only just spotted the iceberg…will get messy.

    NZ has got problems too. Housing growth has outstripped incomes, but our politicians have been doing a good job so far…for starters they didn’t introduce a FHBG in 2008, they are letting inflation eat away at our property bubble and introduced some property taxes. It’s all good stuff, and they are preparing the public for further changes in their second term.

    I just hope your politicians stop prolonging the rort.

    Cheers

    • Hey Ricardo … NZ isn’t immune. When Aussie goes, it will follow quickly. Don’t forget that much of the credit fueling insane prices in godzone is coming from the US bailouts & stimulus via Aussie banks. The rort will be happening on both sides of the ditch.

  22. If price inflation has been driven by “supply shortage”, the inflation will be sharper, AND the deflation will be sharper than if there had been less shortage. I know this SOUNDS wrong, but draw the “supply and demand graphs” for yourself. This is actually mainstream economics, not controversial at all.

    This actually fits real life, too. California, Ireland, etc.

    I find it amusing that so many “economists” do not understand this.

    • its kinda funny that no-one brings this up in mainstream and spruik ‘conventional wisdom’.

      Also the self reinforcing process of bubbles(reflexive)will burst a lot quicker than the grind up.

      Just watch negative expectations and results cannibalize on each other down down down

  23. Why did our homes ever have to become an investment opportunity? it should be the one thing that is safeguarded from economic bubbles, I hope all the people who have used their imaginary money (equity in their properties) to quickly buy up more, become over exposed and loose the lot! Maybe then people will respect property as a home and keep their investments outside of it. Next we will be buying up nursing homes, because that’s where the baby boomers are heading next to create another temporary boom!

  24. Not a financial guru but this is my take on property. Firstly very glad I have ample cash in hand for when property markets start to recover and will buy then. But I have this idea in the back of my mind that even if the bank is willing to loan you a million dollars; and say you decide to take it; what happens if you default. Surely the bank would still have the property, they would have your interests for many more years to come and what is a million dollars if not a mere digital transaction. So you will cry and the bank will go “damn we could not keep that sucker but no worries – we have lost nothing” Is my idea correct?