Rent and sale report June and march quarter Sydney

[boz]

from the NSW housing department:
http://www.housing.nsw.gov.au/NR/rdonlyres/35FE79CA-FCA7-4855-B20C-57CFC7486537/0/RandSReport84.pdf
It confirm as we all know that rents are gone up double digit as you can see on page 1.
The sale data at page 10 is reporting not very good result for the march quarter with relative big drops in just 3 months

 

[spark]

Rent rises can be explained by the sale price drops - FHB's postpone buying when they see prices sliding down. The longer they'll slide the higher the demand for rentals will be.

It's like a mirror image of 2002-03, when everybody rushed in to buy, vacancies went up, and rental prices went down.

 

[Shadow]

Bear in mind that the HNSW figures are 'raw' and don't correct for compositional changes in the sample group. If lots of big fancy houses in great locations sell in Q1 and then lots of smaller houses with no view sell in Q2, then the median will appear to have dropped, when in fact the sample group has changed. Then in Q3 if lots of massive waterfront mansions change hands, the median will appear to go through the roof.

For example, the HNSW report linked above makes the following statement:

For strata dwellings in the Sydney SD ... Six LGAs in Sydney recorded annual increases of more than 10%, with the largest increases recorded in Burwood (25.0%), Pittwater (24.9%) and Lane Cove (23.5%).

Now, I live in Pittwater, and can tell you that while prices have certainly risen over the past year, they have definitely not increased by as much as 24.9%!

The bottom line is that trying to establish market direction using raw medians is very difficult. The official ABS figures utilise a stratified hedonic index, which corrects for compositional changes in the sample group. The ABS data is shown below...

June Quarter House Prices - Official ABS Statistics

Prices in Sydney, Brisbane, Adelaide and Darwin are UP.

http://www.abs.gov.au/AUSSTATS/[email protected]/mf/6416.0

June Quarter 2008
Australia –0.3
Sydney +0.3
Melbourne –0.3
Brisbane +0.6
Adelaide +0.4
Perth –2.4
Hobart –2.0
Darwin +1.9
Canberra –1.4

Shadow.

 

[boz]

Bear in mind that the HNSW figures are 'raw' and don't correct for compositional changes in the sample group. If lots of big fancy houses in great locations sell in Q1 and then lots of smaller houses with no view sell in Q2, then the median will appear to have dropped, when in fact the sample group has changed. Then in Q3 if lots of massive waterfront mansions change hands, the median will appear to go through the roof.

For example, the HNSW report linked above makes the following statement:



Now, I live in Pittwater, and can tell you that while prices have certainly risen over the past year, they have definitely not increased by as much as 24.9%!

The bottom line is that trying to establish market direction using raw medians is very difficult. The official ABS figures utilise a stratified hedonic index, which corrects for compositional changes in the sample group. The ABS data is shown below...

June Quarter House Prices - Official ABS Statistics

Prices in Sydney, Brisbane, Adelaide and Darwin are UP.

http://www.abs.gov.au/AUSSTATS/[email protected]/mf/6416.0

June Quarter 2008
Australia –0.3
Sydney +0.3
Melbourne –0.3
Brisbane +0.6
Adelaide +0.4
Perth –2.4
Hobart –2.0
Darwin +1.9
Canberra –1.4

Shadow.

Thanks shadow, so lower values would mean more apartment and small units have been sold compare to the 2007 last quarter. I thought this would mean that more investor are getting in property market, this would also explain why the rental data for unit has risen less then houses for the quarter. But then I can see from the bond data on page 8 that new bonds are dropping and the total bonds hold are up just 0.2%. I think from the data we can extrapulate that homebuyers just buy cheaper property and more expensive property have less turnover. Do you agree with that?

 

[Shadow]

Thanks shadow, so lower values would mean more apartment and small units have been sold compare to the 2007 last quarter. I thought this would mean that more investor are getting in property market, this would also explain why the rental data for unit has risen less then houses for the quarter. But then I can see from the bond data on page 8 that new bonds are dropping and the total bonds hold are up just 0.2%. I think from the data we can extrapulate that homebuyers just buy cheaper property and more expensive property have less turnover. Do you agree with that?

Hi Boz, yes, I do agree with that. From personal observation of my area, anything under $1M is selling relatively easily and quickly so long as vendors are realistic about the price (the median price in my area is around $1M), however anything in the $1M+ range is sitting on the market for a while. Vendors are not dropping their price and buyers are not willing to commit until there is a clear sign of interest rates dropping, so the result is a slower market at the top end. Having said that, in the last week or two I have started to see more people at open house inspections and a bit more life coming in to the market in general.

The Northern Beaches area does tend to be quite seasonal, especially for rentals. There is a lot more activity in the summer months when the sea is warm and the beaches are packed... every day is like a holiday on the Northern Beaches during summer!

Shadow.

 

[yorke]

from the NSW housing department:
http://www.housing.nsw.gov.au/NR/rdonlyres/35FE79CA-FCA7-4855-B20C-57CFC7486537/0/RandSReport84.pdf
It confirm as we all know that rents are gone up double digit as you can see on page 1.
The sale data at page 10 is reporting not very good result for the march quarter with relative big drops in just 3 months

Yet taken over the whole year the numbers are still in positive territory. So much for the 30% or more crash that you boys were expecting.
The lower figure for the quarter could be explained by the shift of renters into the lower end of the property market to escape recent rental increases and investors picking up bargains. With the rates on the way down we should see more of this shift over the coming months. Once the available stock of lower priced RE is snapped up we could see a "jump" in property prices and the return to the average upward trend in prices. And that, my teddy bear friends from D&G Central, concludes todays lesson in property investing.

 

[banahers]

Yet taken over the whole year the numbers are still in positive territory. So much for the 30% or more crash that you boys were expecting.
The lower figure for the quarter could be explained by the shift of renters into the lower end of the property market to escape recent rental increases and investors picking up bargains. With the rates on the way down we should see more of this shift over the coming months. Once the available stock of lower priced RE is snapped up we could see a "jump" in property prices and the return to the average upward trend in prices. And that, my teddy bear friends from D&G Central, concludes todays lesson in property investing.

So now there is a fixed supply of lower priced RE is there?

Your in for a nasty surprise my friend in the next few years. Property is not going to crash overnight. It will take years to play out.

 

[Shadow]

So now there is a fixed supply of lower priced RE is there?

Your in for a nasty surprise my friend in the next few years. Property is not going to crash overnight. It will take years to play out.

What is going to cause this big crash banahers? What is the trigger?

 

[banahers]

What is going to cause this big crash banahers? What is the trigger?

Evil Specufestors going bankrupt.

 

[boomtown]

Evil Specufestors going bankrupt.

Because if falling interest rates dont get us, rapidly rising rents will send us all to the wall.

 

[Shadow]

Because if falling interest rates dont get us, rapidly rising rents will send us all to the wall.

Those tax cuts are a killer too.

 

[yorke]

So now there is a fixed supply of lower priced RE is there?

Unless you can builders to put up houses below replacement cost and claim them as tax deductions then YES. In case you are not aware, maybe you are not from around here , most building materials have gone up over the past 12 months and in some cases they've doubled. Thanks to the tree huggers and greenhouse brigade some states have had new regulations introduced over the past 12 months plus the labour costs have also gone up as well. You'd have to be STUPID to think you can build a house at last years prices. So yes there is a fixed supply of already built cheap homes.

Your in for a nasty surprise my friend in the next few years. Property is not going to crash overnight. It will take years to play out.

I think that is you who will have the nasty surprise my friend. The correction "we had to have" has already happened but you failed to notice it because it wasn't the 40% you've dreamed about. In a few years time when your wake up the property prices will be much higher then todays prices and you wish you bought now at the low point I just hope you remember this:
YORKE TOLD YOU SO !!!!

 

[yorke]

Evil Specufestors going bankrupt.

And why would they go bankrupt,haven't you heard ? The workers are getting a pay rise soon so they'll be able to afford another rental increase.