Market sentiment - March 2014

Discussion in 'Property Market Economics' started by Scott No Mates, 26th Apr, 2014.

  1. Scott No Mates

    Scott No Mates ...and people wonder why?

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    I had received an email the other day from a mortgage broker. There was a little bit of interesting reading and some interesting conclusions to be drawn from a few of the points made:

    1. 9.7% of Australian properties resold over the final quarter of 2013 sold at a loss, down from 12.6% of sales a year earlier. Across the combined capital cities, 6.5% of sales were at a loss compared to 9.8% a year previous (RP Data).

    Based on these stats, then there has been a reduction in the number of loss-making resales.

    2. The total value of these losses nationally was $457 Million, meanwhile $15.2 BILLION in profit was realised over the quarter (RP Data).

    It goes without saying, that if only 6.5% of national sales were at a loss then the profit figure is going to be much larger.

    3. 71% of potential first home buyers think the Australian dream of owning your own home is realistic, up from 67% in September 2013 (Genworth).

    Would a change of government have had any impact on this?

    4. 42% of Australians believe now is a good time to buy a home. However, well over half of the existing property investors believe that now is a good time to buy (Genworth).

    Do we take this with a grain of salt? The company providing mortgage insurance is backing consumer confidence (a measure of how they rate themselves and their risk possibly?)

    5. The average hold period of loss making sales was 5.3 years, while the average hold period of profit making sales was 9.9 years (RP Data).

    Is the moral of this story to hold out for longer to realise the profit or that those who sell in a short period are likely to make a loss?

    6. The regions with the highest proportion of loss making re-sales were: Regional Qld (23.7%), Regional WA (19.3%), Regional Tas (18.0%) (RP Data). The regions with the lowest proportion of loss making re-sales were: Sydney (3.6%), Perth (4.3%), Melbourne (6.0%) (RP Data).

    The cynic in me makes me read this as where "not to buy", "don't believe all of the hype" - there must be some who make money ie the early adopters but the rest miss out when they cash out. Also goes to sustain the argument that there is little capital growth in regional areas. It goes on to back up that capital cities are a better investment for those seeking capital growth. What if your strategy isn't capital growth ie buying cf+?
     
  2. Angel

    Angel Member

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    I think "regional Qld" and "regional WA" is an ambiguous way, I mean tactful way, of saying mining towns and/or Gladstone.
     
  3. norwoodman

    norwoodman Member

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    I don't think it's just Gladstone in Queensland. Mackay is also on the decline, and the other major regionals are still in recovery mode and haven't really picked up pace yet (Cairns, Townsville, Rockhampton).

    It's a bit unfair to lump all the non-capitals in each state together for comparison. It doesn't really tell you anything useful given how segmented different markets are around the country at the moment.
     
  4. Angel

    Angel Member

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    Exactly. I don't pay much attention to RP Data, I think they call Australia, Qld and Sydney all the same market sometimes. Do you think, Norwoodman, they leave off SA altogether?
     
  5. Freedom

    Freedom Member

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    Remember that Qld is the most decentralised state and that the Gold Coast and Sunshine Coast are classified as regional/outside capital city.
     
  6. Kent Cliffe

    Kent Cliffe Momentum Wealth

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    My deduction is the big driver behind these stats is the low interest rates. If more people had mortgage stress I think the bullet would be easier to swallow in selling a house over renting it out at an ongoing loss.

    With confidence measures the old adage is to be fearful when everyone else is greedy and be greedy when everyone else is fearful.