Further to the charts posted earlier today on the latest RP Data-Riskmark house price indices for August, something I have been following is the comparison between the current pace of house price declines in Australia to the slide we experienced during the GFC and the fall in prices experienced in the US.
As you can see from the chart below the current pace of house price declines in faster than that experienced in Australia during the 2008 slide, while US prices declines were even more tempered through the first 12 months, before the tsunami of selling began once people realized the Ponzi scheme of buying and flipping was done.
It seems that the fall in the appetite for, and price of, credit has been responsible for the slow melt in prices to date. Should prices fail to recover, it is likely that the selling pressure will intensify as investors can no longer justify holding on to properties that are falling in value and, with an unequivocal connection between falling house prices ad rising unemployment, we are unlikely to have seen any forced selling yet either:
