House price falls accelerate (by Leith van Onselen)

Housing data provider, Australian Property Monitors (APM), yesterday released its September quarter house and unit price figures. It was another poor result with house price falls accelerating, declining -1.6% nationally in the September quarter compared with a -1.2% fall in the June quarter. Unit prices were more resilient, falling -0.6% in the September quarter, matching the -0.6% decline registered in the June quarter.

Below are the key tables from the APM release via SmartCompany:

I’ve charted the APM data to show you how far losses have mounted. The below charts shows the peak-to-trough declines for each capital city and nationally:

Nationally, house prices have fallen by around 4% from their peak, lead by Brisbane (-8.6%) and Perth (-7.8%), followed by Adelaide (-5.3%), Hobart (-4.9%), Melbourne (-4.1%) and Darwin (-3.8%). Canberra and Sydney have proven more resilient, falling only -2.0% and -1.9% respectively.

The story is more varied for units, where prices have fallen -1.6% nationally. Perth (-10.4%), Hobart (-8.6%), Canberra (-6.8%), Darwin (-5.2%), and Adelaide (4.6%) have been hit hardest, whereas Melbourne (-2.5%), Brisbane (-2.3%) and Sydney (-0.6%) have held-up better.

When inflation is taken into account, the real losses in values have started looking quite nasty in some markets:

Nationally, house prices have fallen by -8.1% in real terms since their peak, whereas real unit prices are down by -5.6%. Brisbane (-12.7%), Perth (-11.6%) and Adelaide (-9.2%) are leading the housing losses, whereas for units, the largest real price falls have been experienced in Perth (-15.4%), Hobart (-12.9%) and Canberra (-11.2%).

Below are a series of charts showing the evolution of prices since the beginning of the APM price series in June 2004. Note the huge run-up in prices in Perth and Darwin in the lead-up to the current slowdown, as well as Sydney’s laclustre price performance.

It will be interesting to see whether the RP Data’s hedonic figures, which are due to be released for the month of September on Monday, confirm the APM results.

[email protected]


  1. Nervousness afoot, though. With the ‘resolution’ of Eurpoe yesterday, I note quite a few properties that have been about for a while went ‘under offfer’ this morning, here in NZ.

    • Janet,

      Further to the auction I mentioned a ways back wherein a 3/4 acre property got one bid of $400k, and was passed in on a second vendor bid of $460k.
      The property has now appeared on the market at “Offers over $499k”.
      By my reckoning, the difference of $100k between the only bid and the now-listed asking price pretty much represents where the market has to go.
      I’d bet quids that, as you suggested, potential buyers will be told that the property passed in at auction at $460k 🙂

      • Vendors know (and always have!) that they have to figure out what the current expected discount-to-market is.That expectation is just getting bigger, and bigger, as -20% becomes the norm, here in NZ, that buyers expect to get. So we get the ridiculous situation of asking prices rising into increased market supply and less vendor demand ( or capacity to pay, more like!) As my comment above hints: Someone is going to blink. Maybe Europe will be the catalyst…and even though I expect vendors to yield, we shall have to see 🙂

    • > With the ‘resolution’ of Eurpoe
      > yesterday, I note quite a few properties
      > that have been about for a while went
      >‘under offfer’ this morning, here in NZ.

      Give it a few months. The life time of this resolution will be no longer than the lifetime of TARP, QE1 and QE2. In the meantime the price of oil shot up to nearly $94.

  2. Thanks UE, especially for the peak to trough charts. MSM rarely (if ever?) quotes the peak to trough numbers, which is a crying shame.
    Rather than “peak to trough” I think of it as “decline from peak”. “Trough” could imply some sort of bottom.

    • Yes I’d noticed that too, it’s frustrating. It’s rarely prominent in – and sometimes omitted from – the news releases. One often needs to source the full data back at their website. Not conducive to cut-and-paste journalism, methinks.

    • The other, and more benign reason for this may simply be that the MSM have become a churn factory for sound bites and factoids…meaning that they no longer stop to do any significant analysis on the numbers, they simply report them.

      This would explain why they only ever report periodic changes and not trend information anymore. The best we see are 3-6 month charts on the AUD or the ASX after a long period of continued shit blowing through the fan.

  3. This is another reason for the RBA to cut, which, combined with the European “solution” will put a rocket under the spring selling season.

    • With the European Solution and reports like this;

      U.S. Economy Expands at Faster Pace on Consumer Spending

      There will be no surprise if the rhetoric changes to, “…with huge upturns in the U.S. and confidence restored in Europe, Australia saw an up-swing in,…, and the rest of it”. “This has lead to the RBA increasing interest rates by 25 basis points, signaling strong growth in demand, and sound fundamentals, despite being on the back of soft-internals….”. You’ve heard it all before.

      And the Australian people will be in such delight, they shall applaud with a standing ovation that happy times are here again.

      Yeah I know, I doubt it too. It wouldn’t surprise me though.

  4. I distinctly remember reading that Melbourne 12 months or so ago had an average house price over $600k …. and that recently there was a rerate downwards of historical data. if in fact this is the case the fall could be harder then stated in the reports above.

    we need a real estate equivalent of a balticdry index lead indicator … maybe bmw finance have a days in areas graph

  5. The way things are going, Steve Keen might have been a tad conservative.
    No doubt his detractors and maligners will be lining up to apologise.

    • I doubt it….I don’t think his detractors and maligners are the types who apologise. Rather it will appear they have always known there would be falls.

      • The falls are real, and in fact a good bit higher than the medians indicate (compositional bias)

        But the falls won’t go anywhere near Steves predictions – it just won’t happen like that.

        Melbourne is the most vunerable, but expect Qld and WA to level and then show an upward trend in the latter part of 2012.

        • Melbourne is the most vunerable, but expect Qld and WA to level

          That’s been true for well over a year now Peter, but Brisbane and Perth continue to plunge while Melbourne holds up. Melbourne apartments were up QoQ FCOL! Haven’t they build a gazillion apartments down there?

          The Lorax aka carbonsink.

          • The BurbWatcherMEMBER

            …for what it’s worth, VIC is actually the most “behaving” state, from my BurbWatch equilibirum point of view. See:!vic , chart 15

            Notice that for the similar charts on QLD and WA, that those two states are moving away from equilibrium slowly (indicating they “will” tend to come back down).

            My 2c

        • >but expect Qld and WA to level and then show an upward trend in the latter part of 2012.

          Peter I would be interested to get some background on this call. I can’t really see anything in the data that suggests we are about to see a turn-around in either of these states and the long term trend in rates credit issuance is down since the GFC, even with the stimulus program.

          Is your opinion based on the belief that lower prices, consumer economic expectations, interest rates(?) and/or the overall economy will lead to an uptick, or is there something you have seen that leads you to this conclusion ?

          Maybe just long term experience even ?

          The latest credit data has shown an up-tick in re-financing, and for states like Qld I would expect to see a bit of a boost in new builds on the back of the grants (

          But none of this leads me to believe we are about to see a turn around in house prices, possibly a slowing in the rate of the fall but little else.

          Obviously this is just my assessment of the data and your prediction may well be correct, but I would be genuinely interesed in how you are coming to that conclusion.

          • Boost – The building boost seems to have difficulty getting the traction they expected.

            FORECAST – No hard data will be available until after the event, but there are some knowns to use as indicators, plus some reasonable assumptions.

            These are:-

            1. I am assuming two interest rate reductions, but even one will stimulate the new buyers to a degree.

            2. We know that the 457’s are flowing freely again, and immigration has been stepped up to provide a workforce for the mining projects that are too far advanced to be pulled.

            3. Even without rate reductions, borrowing rates of around 6.3% fixed for 3 years are easily obtainable, and that is below long term averages.

            4. Both Brisbane and Perth started falling well before other capital cities. Both cities have relatively tight rental markets, especially Perth.

            5. Both cities will benefit from the mining projects, as mentioned in 2. above.

            6. Banks have money to lend, and they are competing for business. They are lending aggressively, and as they become more complacent about the NCCP guidelines, they will relax requirements.

            7. Median prices in Brisbane may be $429,000 but many homes are available within 15K of the CBD for just over $300K and even less.

            8. Brisbane is trending well above long term prices, but the city has “gentrified” a lot over the last two decades, therefore probably about 10% of the excess is irreversible.

            9. Like it or not we are going through a mining boom, with low unemployment. Underemployment seems to be falling from my perspective – anecdotal.

            10. New buyers tend to hit the market when house repayments roughly equate to rents. Rents for average 3 bed dwellings in Bris are around $350 per week, which at 6.25% will get you a loan of $250,000

            Here is a link to rents in Logan Central – well out of Brisbane, and definitely a poorer working class area.

            Using the same area as a guide, here is a link to homes available –

            There are homes to be bought for around $250,000 in Logan.

            Much the same equation applies to most working class areas around Brisbane, and it is in the working class areas that the trend will be seen first.

            11. Office space in Brisbane isn’t being gobbled up hungrily by the Coal Seam Gas miners, but it is being taken up, and demand is rising.

            I am somewhat embarrassed to provide this link – but it does highlight what I have stated. Note that I am way less bullish than Katter, cautiously bullish perhaps.

            I would expect a slight bounce for Xmas, then more slight falls until we get a second rate cut, and then modest rises in nominal prices, which may trend below “real” rises for some time.

            All of that is subject to about a 1000 moving parts in the global machine, and nothing is certain by any means. (Who would ever have thought that for example, a bank in France going into bankruptcy would affect house prices in Brisbane)

            But I do expect a small turnaround in Brisbane by Xmas 2012.

            Perth – I don’t know the market as well, but the mining effect is more pronounced there, and rental vacancies tighter, so I still see Perth moving upward at the same time as Brisbane, whilst Melbourne really must fall in both nominal and real terms. What drivers are there left for Melbourne? None to my knowledge.

            Note the conclusion that I draw is an expectation rather than a prophecy.

          • Awesome Peter.. Thanks for that. I completely agree those are reasonable assumptions.

            Out of all of them I most worry about number 9.

            > 9. Like it or not we are going through a mining boom, with low unemployment. Underemployment seems to be falling from my perspective – anecdotal.

            Because iron ore is looking very flakey at the moment and if we get a ToT shock then all bets are off.

            Thanks again, most valuable

          • Iron ore prices will greatly affect Perth, but not Brisbane. We are Coal and CSG here, plus Copper etc.

            Some fall off in Iron ore demand will affect coal for steel production, but not power generation.

            For every negative report on China, I can find one positive one.

            Copper was falling rapidly, and then suddenly demand came from nowhere. Getting a handle on true demand is really difficult – what percentage of the futures/trade are from speculators? I just don’t know that, but there have been negative calls on China for many years now, but demand remains and China claims that GDP remains high – is there really any absolute clear evidence either way?

          • Peter, on point 9,

            “9. Like it or not we are going through a mining boom, with low unemployment. Underemployment seems to be falling from my perspective – anecdotal.”

            From the perspective of CentreLink (an employee), and a Mission Australia employee, both Unemployment and Under-employment have been on a significant increase since July 2009 and still increasing. Rather than speaking anecdotally on this, you can research on how unemployment is calculated (determined more correctly). Australia calculates Unemployment (and inflation) using an International Standard for calculating this. One can receive Centrelink benefits-assistance and yet, not be counted as unemployed. I would imaging QLD would have a higher unemployment-Underemployment rate than NSW. That’s really the only point I can take you up on.

            Really, I want you to be correct. I know many people now that are on an increasing level of nervousness, much fault is on them though, spending too much more than incoming but, their incoming stream is significantly less for them now, than it was 3-4 years ago.

          • Thanks Botrot – I’ll take that info onboard. I have been allowing a higher rate than the official rate, but exactly how much higher is difficult to determine.

            I realise that a lot of people are concerned about the future, and that is probably a good thing as they are now saving instead of spending, which I know has retail repercussions, but it is always a trade off.

            However I don’t think that most people understand how truly blessed we are in comparison to other nations.

        • Diogenes the CynicMEMBER

          PF you are going to be wrong on Perth. The top suburbs (coast, river inner city) have heaps of very nice housing on offer at ever reduced prices. Vendors are starting to get desperate so I expect this summer will see the vendors start to meet the market. The price reductions are much greater than the median falls of 10%.

          • Well being wrong is not an entirely new experience, so I’ll take that in my stride if and when it happens.

          • But I do expect a small turnaround in Brisbane by Xmas 2012

            Peter, that’s so far into the future as to be worthless. Another year of 5-10% YOY declines seems inevitable, imo. That has its own momentum and with the “1000 moving parts” overseas moving in the wrong direction, the negative momentum will gather.

          • Revert2Mean – I don’t consider that a look at Xmas 2012 is long term, it is only just over a year away.

      • It’s always interesting to look at You can see how long properties have been on the market, and their price reductions, if any. When you look at some of the expensive areas in any city, like Mt Lawley in Perth for example, you will see that some of the houses have been there for many months, and some of the very high prices have been reduced a little, but obviously not nearly enough to sell. By the way, refind seems to underestimate time on the market – maybe they only count weekdays, so in fact the properties have been there considerably longer than quoted. There is still a huge disconnect between vendors and buyers in many areas in Australia, and it will take a while for much of the population to realise that we’re on a downward slide. In a south-east suburb in Melbourne for example, a real estate agent has had their own house on the market, for about 3 years (they keep relisting so it doesn’t come up on refind for that long) and they are asking over $4 million. There has not been a bite yet, but now they’ve got it available for rent at about $4,500 per week. I know that’s an extreme example, but there are many places that just sit on the market waiting for some sucker to come and pay the asking price or somewhere near it. It seems that a lot of sellers would rather wait than lower their prices much. Properties are still selling, usually after auction but as the price results are rarely publicised these days, it’s hard to see what they went for. The glut in Melbourne seems to be in apartments, but they still seem to go for high prices too, so I guess we have to be patient and wait for this thing to play out to its full extent.

      • despite generally agreeing with Keen he also has shown a complete inability to admit any fault or failure in forecasting, both sides can be just as stubborn

        • Except that he did walk to Kosciuszko… That’s a big call, bigger than most of his detractors would be prepared to do.

          Sure, he struggled to admit he was wrong there, saying that it was the timing. But if he had admitted to being wrong back then, it looks like he would have been wrong twice. Once for the wrong timing, and once for admitting he was wrong.

          • @ Mila – the government always meddles with the housing market – either fiscal or monetary.

            The excuse “gosh, I never knew policy makers would respond” is niave.

            Just like China bears will say “gosh, I never saw the government intervening to mitigate a property crash”.

          • China Watcher, So are you saying Keen should of known that the government’s would do anything to keep the property gravy train rolling? despite defeating common sense? Isn’t that why his predictions have been out?

        • TSpencer,

          I don’t see how you can say:
          “he also has shown a complete inability to admit any fault or failure in forecasting”

          Keen admitted he got the first short-term part of the bet wrong, and walked the walk, so to speak.
          The rest of the bet with Robertson, and subsequent Keen forecasts, are all yet still in the time pipeline – so what’s to admit?
          The way the trends, as shown in the above article, are headed, he’s got a pretty good chance of watching Robertson do the same walk.

  6. Doesn’t look good at all – as you’ve been saying for a long time. Now we’ll hear about the expected “spring bounce” from the spruikers all the way until the December figures are released.

    Am I right to think that, as ugly as they are, the REAL falls are not any more concerning to a highly leveraged borrower – given that the other side of the ledger, their loan, is not inflation adjusted?

    • The interest rate they pay on that debt accounts for part of the loss in time value of money.

      Personally, I’d be concerned.

      After seeing these numbers I expect to hear a lot more about the “total return” of property ie. the new (flawed) methodology that includes an imputed rent into the return figure.

      • Agree about the “total return”, which excludes:
        * strata fees
        * maintenance
        * council rates
        * water rates
        * RE Management fees
        * insurance
        * anything else?

        Rismark started it last month, and I expect that in the next few months that will slowly become their lead metric.

    • Dan, i noticed that despite articles talking about the start of the Spring auction season, there has been a very conspicuous absence of articles describing what has actually happened thus far.

      Clearance rates and the number of properties sold, in Sydney at least, remain where they were during Winter. And failed auctions continue to be underreported as well.

      As per usual, by the time the public realises what has been going on prices have fallen already. Thats when the bigger falls start to happen. But like the US, the magnitude of price falls will vary by region as some are far more overpriced than others.

      • The BurbWatcherMEMBER

        Again ,to ring my own bell, but if you check out BurbWatch, you will get the sense that the spring rally thus far has been mostly flat for most states (relative selling charts), and that buying tends to how been in response to reductions (price reduction responsivity charts).

        Added to that, rental and sale stock are holding up quite well (which is bad), and are now even increasing in a number of states.

        My 2c

  7. Interesting to note that despite the credit boom & post-GFC stimulus, in the last 7 years house prices have NOT doubled 🙂 (Perth excluded obviously)

    That’s another myth busted…

  8. Hugh PavletichMEMBER

    Leith – superb article as usual.

    I seem to recall that an Australian blogger sometime ago compared the new builds for Texas and Australia these past 10 years.

    Texas with a population of 25 mil and Australia with 22.5 mil both put in place something in the order of 1.5 mil new residential units these past 10 years. Texas population growth was higher, if my memory serves me correctly.

    It would be most helpful if you could consider comparing the build performances these past 10 years of both the Australian and Texas markets, because the latter is a normal affordablke market, where the housing overall is about 2.5 times household incomes.

    Hugh Pavletich
    Co author – Annual Demographia International Housing Affordability Survey
    New Zealand

    • Yes, that might be an interesting comparison. As I recall Texas experienced only small house price falls, so what are the similarities, and what are the differences?

      • Just googled median house prices in Texas and they seem to be half of what we have here. Surely Texas incomes are not half of what we make here. Maybe the reason they didn’t experience large falls is because prices didn’t bubble to unaffordable levels.

      • Pete. I have written loads on the Texas system – for example, see here and here.

        The key differences between Texas and Australia are that: (1) Texas runs a de-regulated and highly responsive planning system that keeps land prices down and enables new homes to be built quickly and cheaply in response to increases in demand (keeping prices and volatility in check in the process); and (2) Texas funds housing-related infrastructure properly.

        • Leith.

          About time you put tags/labels section on right side of all the MB blogs? It will help people reach this information quickly…

        • Leith,
          Only recently through a previous post, Hugh made me aware of Texas having the Mortgage Consumer Protection legistlation in place, restricting the availability of credit and the home being used as an ATM machine.

          After reviewing Steve Keens work, would this be regarded as the primary reason house prices have been maintained at affordable levels.

          I agree planning restrictions, population increases also place pressure on prices, but the data indicates credit lending practices appear to be the primary cause.

          I swing on this debate every time new evidence comes to hand.

          • Mrobbo. Texas’ mortgage rules are only marginally more restrictive than the other US states. As this Fed Reserve paper points out, Texas had a lot of sub-prime lending and their only real constraint on borrowing relates to its limits on home equity lines of credit (HELOCs) to 80% of the home’s value. And borrowers can still borrow up to 97% in Texas, which is hardly what I would consider conservative (especially by Australian standards).

            It’s also arguable whether a HELOC would be attractive in Texas anyway even without the 80% limit. HELOCs only work when home prices appreciate quickly, allowing the owner to extract the equity. But in deregulated land markets like Texas, house price appreciation is kept in check, thereby limiting the amount of equity that could be withdrawn anyway.

            Besides, plenty of other US states had loose lending but managed to maintain affordable housing due to their liberal planning. Atlanta, Georgia is a prime example.

          • Hugh PavletichMEMBER

            Leith – I understood it to be an 80% lending cap LVR on all forms of residenrial lending in Texas – and that these changes occurred in 1997 from the old Homestead Act. Refer Note 7 to the Dallas Fed Reserve paper.

            Note they are not able to use additional collateral either. So using the equity of the parents home for example would not be possible in Texas.

            The Fed paper makes clear that the losses on sub prime lending were much smaller in Texas too.

            You are correct though that the open land and proper financing of infrastructure are the key factors. They simply overbuilt in the other open market of Georgia with more liberal lending.

            Overbuilding is far less destructive than an artificially scarcity induced housing bubble.

          • Hugh PavletichMEMBER

            Many thanks for that clarification Leith. Obviously – the Mortgage Consumer Protection legislation in Texas is more limited than I thought.

          • Hugh PavletichMEMBER

            If its not the Mortgage Consumer Protection legislation thats doing it as a “financial fuel limiter” in Texas, in comparison with Georgia where there was substantial overbuilding – the question then is – what limited the excess production in Texas?

            Are there other Banking / financial institutions regulatory brakes in Texas? Is the lending culture more conservative in Texas?

            While open land policies and proper infrastructure financing structures are the key drivers keeping housing affordable in both Texas and Georgia – the Georgia overproduction has yet to be explained adequately.

        • Thank you – good analysis – where do you find the time?

          I like the idea of land tax replacing stamp duties (following on from a comment of yours in the second article) but it would be a difficult tax to sell in a “No new taxes” Australia. I believe that stamp duties have a cumulative effect in increasing house prices. When selling, vendors look to cover their stamp duty “in costs”, and agents fees “exit costs”. That means a neutral net profit sale still increases prices.

          Probably the area of disagreement that we would have is household disposable income, but we can leave that for another day. Work to do.


  9. My mate who works in retail banking credit risk told me last night, that the bank he works for (a ‘major’ Aussie major) has started fudging the statistical models which generate the provisioning for the home loan portfolio. DeepT, I think you work in a Treasury fnction, but do you or any others here have any more knowledge / insights into this and where it could end up?

  10. Good work here. Actually, its the ABS numbers that should be most interesting for the Sept Qtr as, up until now, they seem to have lagged behind the two other reporting bodies.

    Given the close resemblence of their stratified series to the APM model, we should be seeing the ABS record a fairly large fall in results when they next report.

    Such a fall will likely get some considerable media attention.

    • Well, they will just change the accounting rules – Mark to Fantasy instead of Mark to Market – and report astounding returns.
      As the rating agencies have reported, the arrear rates on RMBS is climbing slowly, but surely.

  11. I would wait until the RP Data figures come out.
    Even with a high unreported number,RP Data figures show a spring season massacre on the auction clearance front with high 40% figures for Syd and Melb.
    But APM’s Comical Ali Dr Wilson is still reporting auction clearance rates of 56% – 60%, based on a miniscule sample size. In fact, calling it a “sample” is giving it too much credit – lies, lies and damn statistics.

    • SoulNigga Chips

      Yeah, I’m keen to see the RPData Hedonic figures on Monday. Very keen. Personnaly Melbourne isn’t moving as quickly as I would have thought considering all the underlying factors.

      • The BurbWatcherMEMBER

        As mentioned in an above post, IMHO, Melb/VIC is probably the most “balanced” of the states at the moment (compared to the rest of the country).

        Personally, i wouldn’t be looking elsewhere (for now) for “big changes” over the next months.


  12. Good to see resilient old Canberra even showing a decrease in the statistics. From looking at Canberra property for the last year or so, and hopefully holding out a while longer, things have definitely turned down in the last 6 months or so. Like everywhere else, generally the higher the price, the greater the discount. Auctions are quiet, open homes homes are quieter, but unfortunately the agents are getting louder and weirder. In a recent Sunday Canberra Times one agent explained the low auction clearance rate the day before because “of a cold snap”. I hope he had to buy a slab (I mean a case of chardonnay) for all his colleagues because of that comment. is the main site listing Canberra property – who knows why, we’re different here! I started recording the total numbers in March when there were around 2800 for sale. There are now nearly 3500 for sale.

    • Interesting toneloc. As a former Canberran, I know how bizzarre the market is there. Another factor against Canberra right now is that the government has (finally) released significant numbers of blocks for development and the ACT is undergoing a mini construction boom. Other things equal, this should help soften the market.

      The ACT government has, for a long-time, gouged buyers by rationing supply and forcing up prices, earning itself huge financial windfalls in the process. It’s a crazy situation given the abundance of land available for development in the ACT.

      • Agreed UE. You could say Canberra is doing a mini Melbourne. Building is happening everywhere from the new Molonglo development and expansion of Gungahlin, apartments around the lake, to the multitude of knockdown rebuild projects happening in the older suburbs. Quite a few of the latter are hitting the market now and will not break even – some are then going for rent but you would not even see 3% return. The Govt is also looking to infill some of the inner suburbs now where there is basically wasted land doing well… nothing. Houses up to the median price of around 5-600K are still selling ok but you don’t get much for that. In the newer developments around gungahlin there are now over 900 properties for sale and it keeps growing. Some of the builders and developers out there must be getting toey about cashflows and starting to discount.

    • I have to agree.

      Have been looking at apartments in the Belconnen commercial area and prices have definitely come down which is shown here on the APM charts.

      Not long ago a 1-bedder in the Oracle complex was asking around the 380k mark (rediculous I know). Goto allhomes and there are HEAPS for sale for around the 350k mark.

      Was also looking at another older complex where 1-bedders were asking for around 320k, but now recently saw one asking 299k.

      • Good to see the entry level of the Canberra market also discounting/decreasing. Makes me wonder how the median price has held up ok so far when most of the houses for sale seem to be selling for less than they did last year. I must admit I am a little dubious of the median figures reported by APM and RPData especially given their well known dodgy reporting of the auction clearance rates. Perhaps it’s just the scientist in me, but surely I’m not the only who is a little sceptical of the medians reported by APM and RPData.

    • What about the several new green departments that have been setup, won’t they generate more demands? Reading the AFR, there are always new green dept jobs (and lots of others for Canberra), but I think they have to advertise even when they have a local Canberra guy picked already is what I’ve heard.

      • Many depts are decreasing staff numbers due to tighter budgets and the need to meet new pay increases. Redundancies have been offered and taken, plus staff leaving that have not been replaced. Basically many depts have more or less the same budget but have to factor in efficiency dividends and annual pay rises of 3% or more. So one way to cut is to cut staff. Sure there may be new jobs in new depts etc. but I would think that the number of public service jobs in canberra may be in for a small fall, which could of course snowball further should the opposition assume power.

    • Will be interesting to see where all these properties in Canbrra end up at after the 2013 election. When Liberal gets in and shaves a whole lot of pointless government jobs and a couple this with increased supply in property from the mini boom being experienced in Canberra now, will Canberra experience a mini crash?

  13. i live on the south coast in a town that has a very interesting housing market. Close enough for someone to travel to southern sydney, large number of IP’s, demographics of a large post 45 age residents, and a market that has properties ranging from 350k to 1.5million.
    We are seeing 3 new listings a week, and not a lot of sales, the agents still seem to list at the boom prices even though they haven’t actually moved much since 2004.
    I think petrol prices will be the longer term killer for regional areas.

  14. Great to see house prices falling. There can be no denying the crash is here now. I don’t really see what can turn this around, consumer sentiment is in the gutter and the punters finally realise house prices won’t always go up.

      • The BurbWatcherMEMBER

        …does assume a more mechanical-than-not take up of new debt for property purchase, doesn’t it?

        To use a chemistry-type analogy, I just wonder if the path of new debt uptake in response to IR changes will track non-reversibly, compared to the past. Sentiment and peak debt, i might think, are the “new ingredients in the brew”, which could see people respond differently to how they used to – attitudes to debt, affordability, etc, and all that.

        I guess i’m suggesting “It’s Different This Time!”


      • Unless a series of rate cuts were to spark significant falls in the Aussie, blowing out the cost of fuel and many consumer goods. With consumers already “cautious”, it would be interesting to see what would happen in such an event.
        I wonder if the $AUSD is in something of a bubble, courtesy of both the mining boom and the large differential in interest rates between us and most of the rest of the developed world.

      • But UE,

        It has been said many times on this site that ZIRP did bugger-all for the US, UK, Irish, etc. markets.

        Do you think it will be markedly different here?

    • …and you reckon there weren’t just as many finger in the Irish Stew or the Yorkshire Pudding or the American Pot Roast or the Spanish Paella? Vested interests and concerted effort didn’t stop those falls either….

      • The were so many fingers in Japanese property interest too, it looked like a bowl of Soba.

        Unless a business has customers, well its no business if there aren’t many, or any.

  15. Bought today with a 10% deposit a 1 bed+ study unit in Little Bay, eastern suburbs of Sydney – off the plan- for $575K. expect to be up $100K within 2 years when completion is forecast.

  16. Great post UE. First class. Thanks

    Wasn’t unemployment in Ireland and USA around 4.5% as house prices started to fall?

    For the upteenth time…house price falls lead unemployment and CAUSE unemployment in bubbles not vice versa.

    Engaging with debate with folks that can’t see that is a waste of heartbeats and akin a hamster wheel.

    Anyone that states we are OK because unemployment is low is below zero credibility (can you get negative cred?).

    • +1

      And wait a sec, let me dig in my pocket for a tick… Got another one for ya’.


      Many have endured much research into what the Unemployment and Underemployment rate really is. Those that claim it is ~14-17%, really don’t speak through opinion, they back their claim. One professor (I know that can mean nothing, and the opposite of something smart), stated on 2GB radio about 2 weeks ago that, Australia’s Unemployment-Underemp. rate hovers between 17-22%. OK he could be wrong, way off base, tiny bit off base *but*, he backed his claim/research/findings.

      Those that spew the official (in context that word should be changed to bullshitcial) rate, never back their claim.

      Ross Greenwood (of 2GB) is one such person that, if challenged on the unemployment rate, once was questioned if he knew how it was calculated, dismissed any discussion on the basis to quote, “…I see unemployment decreasing,…, no I see it decreasing”. That ill-felt response was rammed down a caller who had the audacity and the bad taste to say, “commonsense tells me that this is not an economy with 5.2% unemployment, its’ not an economy with 7.5% unemployment. I’ve seen this economy with that level of unemployement in the past…”, and it went on for a bit.

      Inflation is another real tickler when you read independent researchers, bloggers, journo that are that way inclined.

      • BotRot,

        Another aspect of employment that doesn’t really get much airtime is the nature of employment these days. Many of the employed now work in low-skilled, marginally-paid jobs, often on a casual basis.
        Hence we have large numbers employed in retail, tourism, hospitality, and services (dog washing, lawn mowing, cleaning, burger flipping, call centres, wedding planning (an old perennial on Macrobusiness 🙂 )
        These jobs are not only marginally-paid, but are extremely vulnerable to changes in discretionary spending.

        • Yes Julius, you made me giggle, despite it being not funny. I know 2 people that have gone from very well paid professional jobs to, a dog-cat groomer, and a take your garbage to a land fill tip person. Both cannot fill a whole day, nor a whole week worth of work.

          I wonder what the average salary in Australia is right now? In Japan (even pre-catastrophe) the average wage has fallen to ~$30K, in the US over 50% of workers are on $26,363.

          Could Mining Boom, low unemployment, and what other goodies the media throw at us be double speak for austerity measures?

    • The BurbWatcherMEMBER

      The do not appreciate “The Problem of Structure”, as I like to call it.

      ie. the current state of jobs is structurally dependent on the paradigm it exists in.

      In this case, we are in a housing price increase paradigm that has created debt and money, pumped into the economy and created and re-aligned the jobs market around itself.

      Hence, when the paradigm begins to unwind, the jobs that were “wound around its structure”, so to speak, start to unwind also.

      (I’ve been meaning to write/blog that for months….nice to have a chance to write something?!?!)

      My 2c

    • Hugh PavletichMEMBER

      McPaddy – many thanks for drawing this excellent YouTube video of David McWilliams warning them in Ireland, years before of the dangers of a housing bubble. And explaining so well how this is a tranfer of wealth from the young to the old…….well of course…..until everything crashes!

      The best the young in Australia and New Zealand can do is resist the temptation to pay bubble prices……and hang the old out to dry.

      Young Australians and New Zealanders need to get on the phone to their mates in Ireland, to learn the realities of a housing bubble crash.

      The money in real estate is made in the buying…… the right time.

      Hugh Pavletich
      Co author – Annual Demographia International Housing Affordability Survey
      New Zealand

      • “The best the young in Australia and New Zealand can do is resist the temptation to pay bubble prices……and hang the old out to dry.”

        Hugh. The young who tried that in Sydney are now old themselves – and have been hung out to dry.
        How much longer?

        • I am patient and I worked through the dot-com bust in the UK for a massive USA .com now dot-gone.

          Happy to wait and save, earn interest, stay debt free and buy when we are ready.

          It is intriguing We have no rush for the market – but I feel – you feel FHB should be rushing in!

          Why? (your starting to show your cards)

          We can wait … can the Speculators hold longer than we can wait?

          I doubt it.


          • Take the case of a person who was aged 20 in 1989 and has seen house prices in Sydney rise to approx 8 times wages in the 88/89 period. This person might have decided not to pay bubble prices and wait.
            Now the person is aged 42 and house prices are approx 10 times a much higher wage. The young person is no longer young and their savings have not been adjusted for inflation – in fact they have been eaten away by inflation and tax.
            (Rushing in my @#$%)
            How much longer must they wait?

  17. First Home Buyer

    Do the record high stock levels in Melbourne mean that prices will decline even faster soon?

    • +1

      Well supply is now coming close to surely a tipping point!

      Bring on the Minsky Moment!

      I reckon it will happen … all though Leith is a slow melter camp (and he is often more right than wrong – dammit 😉 ).

      I think that when people realise that the “Value” they have ascribed to houses for massive long term commitments (Banks owns Your mortgaged arse) and they work out the benefits of not buying at these prices – yeah we’re close to capitulation.

      Bring it on I say.