Via the AFR:
…”Now is not the time to be flipping,” director at Ray White Surry Hills Ercan Ersan said. “Anyone who bought in that period [between 2016 and 2017] and is now selling is doing it tough and they either have to accept current conditions or look at holding onto that property for at least the next three to five years,” he said.
Over the 12 months to September 2018, 1.8 per cent of Sydney properties resold within one year of the property being purchased, down from a recent peak of 3.1 per cent in June 2015, according to new data from CoreLogic.
“As dwelling values trend lower across Sydney, loss making resales are gradually rising, which will make it harder for flippers to turn a profit. Over the twelve months ending September 2018, 5.8 per cent of Sydney re-sales transacted at a gross loss,” CoreLogic head of research Tim Lawless said.
The fear of negative equity is starting to worry more broadly, from ME Bank:
A survey by home loan lender ME confirms house buyers who purchased in the past three years are the most worried by recent falls in house prices, particularly in Sydney and Melbourne.
The survey of 1,500 respondents also indicates the shift in the property market may also flow through to consumer spending.
Overall ME’s Property Sentiment Survey paints a picture of a market with polarised views based on if you own, and when you purchased property.
The key finding is that those who bought property in the past three years are significantly more worried about the impact of prices falling.
Purchased property when?
Last 12 months
12-36 months ago
Longer than 36 months ago
% Worried about value falling 70%
66%
49%
% Worried about losing money on a property 60%
68%
35%
% Worried about owing more than it’s worth 57%
62%
27%
% Regret what they paid 46%
48%
15%
But in a sign that ongoing price falls may hit consumer spending, 49% of respondents said falling prices made them feel less wealthy, while 73% said they would be more careful with their money in future.
In contrast to recent buyers and despite price falls in some regions, first home buyers are still worried about housing being too expensive, with 77% saying they’re ‘worried that housing is increasingly out of reach’.
Different opinions are also apparent when respondents were asked what they think will happen with property prices in the next two years, with 38% saying prices will go up, 26% saying prices will fall, and 23% saying prices will stay the same.
Those who think prices will go up outnumber those who think prices will fall in states except NSW, suggesting the reality of price falls in that state has affected future sentiment.
But one point on which most Australians agree is that housing affordability is still worsening, with 84% agreeing with this statement despite falls in prices in some areas, perhaps reflecting just how much property prices have risen over the longer term.
ME’s head of home loans Andrew Bartolo said: “There’s little point worrying about what will happen to prices short-term if you’re intending to live in a property long-term. Same goes for long-term investors.
“The Australian property market has seen seven price declines-recover cycles in Sydney since 1984 and all have seen prices recover, most within four years.
“When it comes to financial stress banks take a long-term view, focusing on the strength of the economy and healthy employment rather than house prices.
“Two of the factors contributing to prices falls in Sydney and Melbourne are macro prudential requirements and tougher credit assessment rules, which have tightened the supply of credit. Economic growth remains strong and unemployment is low.
“Those looking to borrow should ensure they have a strong savings history, a deposit over 20%, and can demonstrate they can keep their levels of expenditure to low levels long-term.”
Insert RBA stupidity here.
