Zen10

My first thread!

http://www.adelaidenow.com.au/news/s...rom=public_rss

"The RP Data-Rismark July home value index, released yesterday, revealed Adelaide had another poor month for house values and was the weakest in the nation. The monthly change, to July 31, was down 2.5 per cent."

Obviously 2.5% drop annualized is looking good for buyers. How are other areas of Australia doing? I notice UK houses are dropping at fastest rate for three years

http://www.telegraph.co.uk/finance/e...ree-years.html

Are the wheels finally coming off the inflated property markets in Aus and UK?

Title of thread should read July not June - can a mod change that so people aren't confused?

asprilla

Not yet, unemployment in Aus is still very low and people can still afford to make repayments.

Unemployment in the UK is still fairly stable.

Take a look at this chart. In the space of 5yrs, Spain's unemployment has rocketed from 8% to 25%.

Zen10

I'm doubting it's 8% unemployment in UK during the worst financial crisis for decades.

http://www.telegraph.co.uk/finance/j...mployment.html

bingobob777

that would be fully unemployed. The figures don't take into account millions working part time etc etc.

Although to balance it out I know more people being made unemployed in "resource rich" Qld than I do in the UK and I know at least a few hundred more in the UK.

Zen10

It's hard to know where new jobs are going to come from in Britain unless sit gets manufacturing again.

asprilla

Add back in those numbers and unemployment is understated by approx 0.7% (according to my rough calcs).

I guess that my main point, is that there is no huge growth in unemployment in UK or Aus. Therefore a huge drop in property prices is unlikely.

Take a look at this chart. Just by looking at the trend alone, I'd that in 12months time property prices in Adelaide will move by + or - 5%.... with an outside chance of a drop of 10%.

Zen10

Nice chart - these charts showing the massive inflation since the late 90s are just awful, and I speak as someone who benefited enormously from house price inflation. How young people are expected to get on now defies logic. I guess that is why everything is coming unwound.

As for Adelaide, as Bart Simpson says I will eat my shorts if there's a rise in house prices by this time next year. Static is the very best homeowners can hope for I feel. I was talking to the chap that owns a unit near us and they were not confident about the future - they own a few investment props.

jimbo_d

Better get some sauce out to make the shorts taste better just in case. The official ABS figures show Adelaide house prices rose .5% in the June quarter with prices rising 0.5% average across the nation.

http://www.abs.gov.au/ausstats/[email protected]%202012

Zen10

If there's a rise by this time next year - then sauce on shorts it is.

Beaverstate

Hopefully not repeated, but the US housing prices started to plummet years before unemployment rose any.

Zen10

I also question the link because there are so many other factors like total collapse of buyer demand, equity release binges, wage freezes, stagnancy of real wages, massive inflation in other markets, all of which can put downward pressure on housing stock without a single redundancy.

Aus houses are now amongst the least affordable in the world and the only way is down. Look at the global economy - look at the EU, look at China. To think Aus houses can continue to climb is really mad.

asprilla

In my opinion (and I could be wrong ) the US is a special case because of the way that the home loans work there.

As I understand it, a homeowner can simply stop making repayments to the bank and the bank will "foreclose" with no further recourse on the homeowner, even if the sale of the foreclosed property doesn't recover enough to repay the loan.

When the above starts to become a common occurrence, then supply increases massively and prices plummet. To the point where many houses are priced well under their "value".

In Australia (and most other countries, I think) if you stop making repayments, the bank will repossess the home and sell it, and come after you for the $$$ if the sale doesn't pay off the loan. Prices are far less volatile as a result.

You will notice lots of words like "I think", "I believe" and "as I understand it" in the above paragraphs. Some cynical readers may think that's because I don't really know what I'm talking about... They might be right, ha ha.

chris955

As in Australia, there are many who think the real unemployment figure is nearer double the Governments official figure. If you look at what is going on with the public service in Queensland especially it is hard to argue with that. Housing in Australia in many areas is still ludicrously overpriced and this is why so many just cant get on the property ladder.

Zen10

I've read that real US unemployment is closer to 12% than the 9% they talk about. Fact is all the western countries are up shit creek without a paddle and that's going to be the case for many years.

chris955

Absolutely right.