ABCDiamond

If it was I would be rich

littda01

That $142k would be tax-deductible, which is significant.

I am not sure why you're picking 8 years exactly, but I can testify from my own observations of the Melbourne market that in the last 3-4 years, many suburbs have gone up 80-100%. There are several that are reporting 30-40% gains in the last 12 months. I haven't paid so much attention to other cities, so won't comment there.

I see you're trying to paint a longer-term picture, which is fair enough. To get down close to 8% over 8 years, many suburbs will have to show significant decreases in the next few years :-)

ABCDiamond

The ABS 6416.0 House Price Indexes: Eight Capital Cities Tables 7 and 8. Median Price (unstratified) and Number of Established House Transfers starts at March 2002, hence 8 years is the current maximum.

If we pick short terms, then the figures are not as reliable.
For example, if an area drops 15% in 1 year, then rises 20% the next year, can a price change of $400,000 rising to $408,000 really be classed as a 20% property boom ?
This means that they must have done just that in some of the previous years, hence the recent need to rise again to equal the drops

Where the real value is, is anyones guess, and comes down to what people are prepared to pay, and the type of houses they want to get.

eg:
Western Corridor of Metropolitan Melbourne. $229,000

But people want more than that, hence the median prices are higher.

coolshadows

when, in recent time, did we see drops of 15%? I don't even think many parts of the UK have seen drops of 15%, and the bubble there is supposedly burst.

I think anything more than a 10% increase should send alarm bells, as should a fall of more than 5%.

ABCDiamond

2005 Sydney Outer west property prices dropped by 15% to 18%

However.... I did say "For example" to show how it works.

Maybe I should have used 7.5% down and 10% up. The result would be the same.

ozzieeagle

But prices went up by more than 15pct in less than 6months in this part of Melbourne, I'm sure that situation is being undone right now. From April through to November last year vast swarthes of Melbourne saw prices increases of more than 15pct. That definitely happened around the Inner North. So if they Drop 15 pct through to this November they are still up by 5pct perhaps more than November 2009. That 15 pct drop is now happening as far as I can tell. That period from April to November 2009 was the craziest housing price increase I've ever seen. Melbourne apparently increased 24 pct in one year. The reason I mention November, is because thats when it started to appear the trends were reversing.


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

man_called_Horse

The only example in that group in Sydney is Lurnea (crap suburb)

Tuggerwong
Wyee
Wyong
Toukley

Are all Central coast... and would be considered outside Metro Sydney or a best very very very outskirts (practically Newcastle), plus a lot of properties in those areas are weekend holiday homes.

ABCDiamond

The question was "when, in recent time, did we see drops of 15%"
I answered it... The question did not specify Sydney. Nor did the question say to exclude any suburbs because they are "crap" and may have dropped in priced

My own suburb dropped by about 10%, but rose by 15% recently.

That is the problem with short period median prices. When more of the cheaper houses sell, and fewer of the higher prices do, then the median price drops.

eg:

Take eleven houses: 5 at $300k, 1 at 400K and 5 at $500k

Year 1: 3 of the $300k ones sell, the $400k one sells and 1 of the $500k ones sell. Median price = $300k

Year 2: 2 of the $300k ones sell, the $400k one sells and 2 of the $500k ones sell. Median price = $400k

Year 3: 1 of the $300k ones sell, the $400k one sells and 3 of the $500k ones sell. Median price = $500k

All that without a single property price change

man_called_Horse

Hey hold on I am not having a go

Yeah I understood the question and the answer, just the examples listed there.

littda01

I would love to see some evidence of price falls in Melbourne, can anyone point up some?

From wjat I've seen so far, I just don't buy it. Here's the average house price increase data on Malvern East for the last few years.

2010 17.8%
2009 -0.8%
2008 8.8%
2007 24.8%
2006 5.8%

So if you'd bought a 500k house at start of 2006 and sold at end of 2010 (assuming no further increase this yr), you'd expect to sell it for 840K. Thats pretty spectacular growth by any measure.

ABCDiamond

That's my whole point. Medium price changes don't actually mean that actual prices have changed

littda01

ABC, I see and understand the point about Median prices being an unreliable statistic.

But did you not just use those same median prices to argue against my point that house prices have risen crazily in some areas??

And BTW, I just noticed in the example I gave of the 500K house, I said the gross profit was 257K, when actually it would be 357k :-)

Anyway, not a big deal I see where you're coming from.

JulieFulie

I really envy you owning your own house. I wouldn't care either if we owned ours, but lots of people in our position who have arrived in Australia (Perth) from the UK in the last year or so don't stand a chance of owning our own houses until prices do drop, if ever. Mind you, we could have picked a more reasonably priced area to live in, that is true...

ABCDiamond

I'll use any argument against either rises or falls

I did actually check the prices of 40 houses in my post code area recently. Each of them had been bought and sold in a 2 year period.
They should represent real price changes for real property, although increases may be overstated if any improvements have been carried out.
The actual result was an average INCREASE of 3.75% per annum, from 2008 to 2010.

The median price for the area has risen faster than that, due to the number of new 4/5 bed houses being build and sold here recently.

spottydog

Unfortunately buying a house is often about sacrific and unless you're downsizing each step up the ladder takes a bit of pain initially.

To buy our current house despite being in our late 30's we are sacrificing holidays and big spends for the next few years (it gets easier to pay the mortgage after a few pay rises since mortgage repayments don't rise with inflation like rent).

To buy our first place (after the big crash of the early 90's) we had to sacrific location & size and ended up in a "just" 2 bed in a rough area of East London, but it got us on the ladder. We went for the 2 bed so if necessary we could rent out the big room and the two of us live in the single kids room, luckily it never came to that and a few pay rises later we were on the move.