http://kochie.com.au/20110508372/the-property-downturn
Snippets:
There are a number of factors working against a recovery in residential property values;
. banks continue their tight lending policies which is demanding higher deposits and lower repayment to income ratios.
. clearance rates remain low which means there is a continuing build up in stock. The time it takes to sell a property has lengthened considerably which means, for example, property which didn’t sell last Spring is more than likely hanging around this autumn.
. sellers of old stock get desperate and slash their prices which then put downward pressure on the value of new stock coming on the market.
. the dramatic fall in skilled migration numbers means there is a drop in potential new buyers.
. expat Australians who were buying up big when the Australian dollar was weak are now selling up big time to cash in on the higher dollar. They then take the money back to where they live now because it goes a lot further.
. the two-speed economy means there are significant parts of the economy doing it tough and putting people and business under financial stress.
This last point is probably the most significant. Last week the Reserve Bank commented that the Australian economy could have contracted in the March quarter while ANZ boss Mike Smith said the level of financial hardship in parts of the economy was not being recognised seriously enough.
Property is being caught in a serious pincer movement from a number of factors. Three years ago we were cautious… and we still are.
Snippets:
There are a number of factors working against a recovery in residential property values;
. banks continue their tight lending policies which is demanding higher deposits and lower repayment to income ratios.
. clearance rates remain low which means there is a continuing build up in stock. The time it takes to sell a property has lengthened considerably which means, for example, property which didn’t sell last Spring is more than likely hanging around this autumn.
. sellers of old stock get desperate and slash their prices which then put downward pressure on the value of new stock coming on the market.
. the dramatic fall in skilled migration numbers means there is a drop in potential new buyers.
. expat Australians who were buying up big when the Australian dollar was weak are now selling up big time to cash in on the higher dollar. They then take the money back to where they live now because it goes a lot further.
. the two-speed economy means there are significant parts of the economy doing it tough and putting people and business under financial stress.
This last point is probably the most significant. Last week the Reserve Bank commented that the Australian economy could have contracted in the March quarter while ANZ boss Mike Smith said the level of financial hardship in parts of the economy was not being recognised seriously enough.
Property is being caught in a serious pincer movement from a number of factors. Three years ago we were cautious… and we still are.
