daraghm

A graph a mate sent to me.....

Historical Perth median house prices versus theoretical value (inflation based model). Food for thought if nothing else - it does show how overinflated Perth properties are...

Daragh.

Tableland

Excellent graph. I have seen similar graphs for UK housing, and in both cases a return to average trend has happened after every boom. Most people can see from these graphs that the latest boom was totally unprecedented, and the imminent bust will also be so.

NKSK version 2

This supports tht graph shown on ABC the other night - although that one was for Australia as a whole.

The theoretical trend is where I would think Perth prices should be based on the global market.

alipally

It's also interesting to note that the NSW budget has plunged into deficit and a large contributory factor for this was the decrease in revenue from Stamp Duty..... I can't remember the numbers exactly but I think it was down around 75% (anyone confirm?)

As far as I can see this can mean one of two things....

1. nobody is selling
2. prices are dropping

As I'm not in NSW I don't know, which is applicable. I'm sitting tight at the moment though....

ABCDiamond

3. No stamp duty on First Home sales under $500,000

Plus fewer sales due to no one wanting to sell, unless they have to.
Plus house prices have been dropping in the Western suburbs since 2003

IvanM

From what I can see 1 and 2 are happening. Those that are selling are doing so because they have to.

State government is increasing Harbour bridge/tunnel tolls by a dollar in peak hour, eliminated free public transport for school kids, dropped the train line to the hills and some other projects. There are other cuts happening and an increase in land tax on high value properties.

Burbage

Plenty of people are trying to sell, the problem is that nobody is buying. The buyers are now all pretty certain that prices are dropping, so they are all waiting.

This is the problem with the property market as an economic dynamic. Nobody is forced to buy, but over time many owners are forced to sell.

ABCDiamond

The puzzle is: when the people who are trying to sell, do sell, won't they be buying again ?

Or will they be joining all those others who can't find a rental, due to the rental shortages ?

IvanM

The scenarios the estate agents are talking about tend to be moving interstate, moving overseas and offloading investment properties.

NKSK version 2

Isn't it investement property which will hit the market first?

ABCDiamond

Some Sydney House price figures that I just came across:


Annual Capital Growth for Sydney houses (not including units)
Year Capital Growth
Dec-98 8.45%
Dec-99 13.34%
Dec-00 5.80%
Dec-01 16.51%
Dec-02 21.27%
Dec-03 16.97%
Dec-04 -4.11%
Dec-05 -2.64%
Dec-06 0.22%
Dec-07 9.01%

That’s an average growth of 8.2% per year

Sale numbers for those years are:
Year Number of Sales
Dec-98 43,187
Dec-99 47,289
Dec-00 40,671
Dec-01 41,901
Dec-02 52,416
Dec-03 49,773
Dec-04 36,040
Dec-05 33,949
Dec-06 36,210
Dec-07 42,704

Numbers of House sales declined when prices went down (2004/05), but rose when prices went up (2002, 2007)

ABCDiamond

Not if nobody is buying

They may be on the market, but only at a price that is required, but at which no one is paying, therefore the owner chooses not to sell.

There are plenty on the market at the moment in that situation, mine included. Some people say why don't I sell? Others say I am stupid not to sell.

The rent income covers the mortgage, therefore why sell ? But I would sell IF someone paid what I wanted. And there are many in the same position.

IvanM

The likes of yourself are not in the market so do not determine the market. Those in the market are selling because they need to hence they are more likely to lower their prices and that is what will determine the market.

If your investment property is making a profit including opportunity costs then selling is silly.

Burbage

There are always people who have to sell. People die and the house has to be sold, people divorce and the house has to be sold, renters move out and no new ones can be found and the house has to be sold, people move abroad and the house has to be sold, people lose their jobs and can't afford the mortgage and the house has to be sold, developers build a brand new house and the house has to be sold.

No one is foced to buy.

The people who are not selling are the ones who don't have to. You don't upgrade the family home under these conditions. On the other hand, if you've paid off your mortgage (and almost nobody thinks that way in Australia) then you are technically selling into the same market you buy in so it doesn't make much difference. The problem is that if you have a mortgage, the mortgage is based on the price you bought the house at in a market a long time ago, in a galaxy away.

ABCDiamond

With todays vacancy rates, that is unlikely

getting back to the original poll question:

10 Sydney suburbs at June 2008
Postcode : Capital Loss : Median price
2135 : -19.67% : $960,000
2571 : -13.65% : $367,000
2749 : -13.24% : $285,000
2785 : -12.79% : $286,500
2518 : -12.05% : $356,200
2780 : -10.34% : $312,000
2264 : -10.00% : $315,000
2132 : -9.93% : $685,000
2073 : -9.72% : $975,000
2230 : -9.63% : $740,000

Compared to another 10 Sydney suburbs at June 2008
Postcode : Capital Growth : Median price
2022 : 24.93% : $1,140,000
2137 : 21.51% : $966,000
2125 : 18.52% : $784,000
2223 : 18.42% : $675,000
2280 : 17.12% : $390,000
2067 : 17.02% : $1,100,000
2041 : 16.67% : $1,050,000
2206 : 15.63% : $647,500
2281 : 15.61% : $400,000
2112 : 14.76% : $723,000

Or outside Sydney:
Capital Growth : Median Price : Local Government Area
13.3% : $297,800 : Lismore
-42.0% : $87,000 : Upper Darling