1. The downturn has already begun. The key driver is in total mortgage lending. It is down (it needs to grow to support current prices let alone growing ones)
Comments:
1. Seemingly, the downturn appears to have already begun selectively in a number of the Western Sydney suburbs since August 2003, when their median house price has fallen by some 30%-40% since then, to date.
2. However, realistically speaking and Australia-wide, the borrowings for new house purchases are still continuing unabated in Australia, though they are moving at a slower pace and with a lower growth rate in lending figures having been reported recently.
3. When the overall new borrowings and mortgage lending for new house purchases across the various Austraiian States, have been reduced significantly down to minimal level, then it would become a "rightful " concern.
4. If the present level of mortgage lending figures are steadily maintained, even with a slower growth rate in ledning figures being achieved, I would still not be unneccessarily "alarmed", at this point in time.
Unsold inventory is rising across the country, clearance rates are down and prices are dropping.
2. Prices are coming down. As credit and demand drops away we'll see falling prices. They are falling in most capitals - see linked news article above.
Comments:
1. What exactly is the present inventory of "un-sold" newly completed houses in Australia, at this point in time?
2. To me, the present housing prices seems to be "falling" at this point in time, but not truly at its basic fundamental levels, though.
3. This is because, the underlying land price/costs as well as the required construction costs of building a new home have still not fallen significantly, to well-below their real costs and true nett replacement values of building a new house to stay.
4. I personally believe that presently, the housing prices in the various housing markets are actually "pausing" in search for its true (fundamental) underlying market direction, to move next.
5. The housing prices in the various housing markets have seemingly " fall", after its recent market booms, as it has failed to grow continously at the same high rate as expected as well as due to the existing negative market sentiments and the general D+G atmosphere prevailing in Australia.
6. Consequently, some "panicky" house owners are seen, trying to put their established houses for sale for fear of a subsequent fall in the market price, thereby " temporarily" increasing the immediate short term supply of houses available for sale in the market, vis-a-vis its real time effective market demand, thereby leading to some price falls in today's "buyers' market" conditions amidst the present negative market sentiments and the general D+G atmosphere in Australia.
3. There has never been as many houses or bedrooms per person in Australia. Nor vacant houses. Our homeless rates are very low.
It doesn't matter how many people want 10 mansions each, what matters is how much money they can borrow for it. This is in decline, so house prices will follow.
Comments:
1. What exactly is the present number of "renting" families and "social homeless" familes who are truly in need of some housing, in Australia at this point in time? How do these figures fare, as compared to your reportedly "excess" housing investory stock in Australia, at this point in time.
2. About 70% of the present house owners are reportedly buying/"owning" their house to stay as their PPOR. They are likely to hold onto their present PPOR houses despite their present housing stress sufferings.
3. Consequently, I personally believe that these owner-occupiers, collectively, constituting to some 70% of the prevailing markets in Australia, are able and likely to provide the required "stablising" force to counter extreme negative market sentiments or/and to prevent a real market "panic-run" on the various housing markets in Australia.
4. What kind of house price falls, are you actually talking about, please?
5. If the expected house price falls are mere market correction as a result of the existing operation of the Property Cycle, they are unlikely to fall signifcantly much lower.
6. Consequently, I would expect their end price level to be still much higher than the lowest price last achieved at the bottom of the previous Property Cycle.
4. I have read reports on Somersoft of people complaining that new build houses are selling for cheaper than existing houses. Hilariously, they wonder out loud how this can happen when there is an "underlying shortage"
Comments:
1. "New houses are selling "cheaper" than existing houses"? Yes, but objectively speaking, they are actually still selling above their real/actual costs incurred and well above their respective nett replacement value for the new house to be constructed.
2. This is despite the profit margin for house development has been much reduced to a certain extent so much so that it is no longer be feasible to " buy and build" again under the present prevailing "negative" market conditions.
3. The smaller profit margin for house development have actually come about recently, as a result of the present negative market sentiments and negative market conditions, reportedly due to a "shortage" of buyers vis-a-vis the number of house available for sale in the market presently, as many of the potential house buyers are waiting at the sidelines, for the house price to fall further before buying into the market again.
4. The present market situation can easily change again, over time, in the near future.
5-8 Yes. Even though there is supposedly a shortage the market is not responding with more supply, developers are seeing rises in unsold inventory (as are all market participants) and the amount of building is in decline.
Comments:
1. Statistics can lie and they often do lie, if we are not careful in using or/and interpreting them.
2. Objectively speaking, is there truly a "housing shortage" in Australia , at this point in time?
3. As far as the HIA and ABS projections and figures are concerned, it seems there are, as far as many people including those economists/market commentators at the ANZ Bank, would want to believe and think so.
4. Personally, I have a different opinion on this matter.
5. Realistically speaking, I have continued to observe that many new houses are still being built continually to help satisfy the present housing market demand, at this point in time.
6. Do you not agree?
Seen builders share prices recently? AV Jennings has HALVED since the credit crunch began in July 2007.
Comments:
1. So?
2. What are your own conclusions, in this case?
3. ...This simply tells me that the building companies shares are not as "attractive" as before, as far as the share investors are concerned, reportedly due to a change in the investors' beliefs regarding the building companies' likely market performance over next 6-12 months or/and short term market sentiments concerning the true market value and continued market attraction for these shares, as issued out by the various building companies.
4. Does the recent ASX price fall neccessarily leads to an impending housing price fall and housing correction/ "slump" in Australia in the near future? Is there truly a real direct casual relationship between the housing prices and the market value for shares issued by the major building companies, in the first place?
5. I've thought that you have argued and "premised" that the "tighter" credit access and negative market sentiments are being largely responsible for the recent "fall" in the house prices
6....or/and rather, do the impending housing price fall and housing correction/"slump" in Australia, likely to lead to more ASX price falls, eventually, as in the American contect of its recent housing slump and its corresponding stock market movement subsequently?
7. For your further comments and discussion, please.
8. Thank you.
Cheers,
Kenneth KOH
