ABS - housing prices down 7% for year

[ColonialBoy]

"But the latest national figures from the ABS show house prices have dived another 2.2 per cent, almost double the decline of the previous quarter. They have fallen by nearly 7 per cent for the year."
http://www.abc.net.au/news/stories/2009/05/04/2560443.htm

Its basic macroeconomics which I outlined in my previous thread http://www.somersoft.com/forums/showthread.php?t=51556 You cannot have property prices increasing far faster than GDP and wages.

This issue now is when the equilibrium point will be reached. With the recession I can see another 7% fall for the next year.

 

[DavidMc]

Yeah should be some good buying ahead.

Good thing I had my properties revalued Feb 2008 all nice and high, funds in offsets waiting to become deposits.

 

[chilliaa]

Do i care, i would still be worse off if i sold 'at the highs' after taking into consideration CGT and transactions costs for re-entering the market.

And more importantly the cash is rolling it (albiet not much) from the portfolio, so i get PAID to wait.

 

[craigb]

Here around the ACT i have not seen price falls except for top end stuff!
These owners might be self funded retiree's that had no capital gains to claim of their share portfolio's and as things get tighter for them , i think they have re-evaluated their need for the larger homes.

 

[MichaelW]

Agreed...

Its all a bit "yawn" isn't it. Seriously, even if we saw 20% price drops we'd still only be giving back one of the more recent years of growth. Not suggesting we WILL see 20% price drops across the board, just pointing out that its all a bit relative.

If prices drop 20% then yields increase by that amount roughly. So, a 5% yield today would be a 6% yield tomorrow after a 20% price drop. With prices off 20% the RBA will be lowering and interest rates will be even better. Cash flow properties the norm and a bottom for the market. The clock ticks forward and the cycle moves on.

Again, yawn...

Cheers,
Michael

 

[Aaron Sice]

precisely.

i guess these reports don't highlight that 2/3rds or Australia went up by 50% OR MORE, so a 7% reduction of those highs in worst case scenarios is still a 46ish% gain.

yep - it's yawn material alright.

 

[natedog]

Hey all,

If these stats are based on the median price of property accross an entire country there are 2 ways i interpret it

1. Property values have dropped everywhere or.....

2. More bottom end properties have sold than top end properties, dragging down the median...even though some bottom end areas have seen price growth.

i tend to think that point 2...especially with FHOG boost.... has probably occurred/is occurring

Cheers

 

[jingo]

"But the latest national figures from the ABS show house prices have dived another 2.2 per cent, almost double the decline of the previous quarter. They have fallen by nearly 7 per cent for the year."
http://www.abc.net.au/news/stories/2009/05/04/2560443.htm

Its basic macroeconomics which I outlined in my previous thread http://www.somersoft.com/forums/showthread.php?t=51556 You cannot have property prices increasing far faster than GDP and wages.

This issue now is when the equilibrium point will be reached. With the recession I can see another 7% fall for the next year.

mmm. I just had a property re-valued last week. Up by 12% since it was last re-valued in December 2007.

So not really a problem to those of us who have re-valued our IP's and set up LOC's and redraws to use as deposits on other properties for when prices come down further.
Bring on the bad news - it's good for us who are intending to buy again!

 

[yorke]

2. More bottom end properties have sold than top end properties, dragging down the median...even though some bottom end areas have seen price growth.

i tend to think that point 2...especially with FHOG boost.... has probably occurred/is occurring

Hehehe, and when that's over and the medians jump the bears will once again deny the ABS numbers and call them a pack of lies.

 

[BayView]

Hey all,

If these stats are based on the median price of property accross an entire country there are 2 ways i interpret it

1. Property values have dropped everywhere or.....

2. More bottom end properties have sold than top end properties, dragging down the median...even though some bottom end areas have seen price growth.

i tend to think that point 2...especially with FHOG boost.... has probably occurred/is occurring

Cheers

I agree, based on point 2.

"Median" is the word everyone trots out, but when all the sales are FHB's and investors buying up bottom-end, the median drops.

It is inaccurate and misleading.

In our case, we have just seen a unit sold in the same complex as ours in Frankston- a bottom end unit.

The unit sold for between $207 and $210k last week, and we had ours Bank valued in Nov last year at $280k.

So, based on this as an example, the bottom end is still strong in price and volume of sales.

Top end? Taking a hit I suspect.

Not hard to work out why - fewer buyers at the top end, many traded up in the good times (boom), lost their jobs in the GFC and are now bailing out.

Add to this; fewer around to qualify for finance means less volume, and less demand.

 

[MichaelW]

Hi Guys,

Interestingly, even the RBA today basically called the ABS numbers a load of codswallop:

RBA Statement on Monetary Policy

Housing construction remains weak, but there are some signs that activity will pick up in the second half of 2009. Loan approvals for new construction have increased and a relatively high proportion of households report that now is a good time to buy a dwelling. Borrowing for housing has also increased, particularly by first-home buyers. Nationwide measures of housing prices have been mixed although, on balance, they suggest that prices were little changed in the March quarter, after declining by around 3 per cent over 2008. Strong demand by first-home buyers has seen increases in the prices of lower-priced dwellings, while prices at the top end of the market have continued to decline.

Gotta love it...

Cheers,
Michael