folic

Although real-estate agents continue largely to talk-up Australian property prices and although online comments-sections pooh-pooh many old-timers' predictions of a savage price-drop imminent on the Aussie horizon -- will Australia follow Vancouver's dramatic price-correction ?

Everyone will of course have his/her opinion, making it difficult for those considering buying Aussie property to form conclusions and make decisions

Vancouver is often likened to Sydney, Gold and Sunshine Coast and Melbourne, when it comes to property prices

Also, Canada (like Australia) is believed by many to have largely escaped the global financial collapse and subsequent property devaluations

Was it just a matter of time before Canadian prices began to fall, as many predicted ? Will Australia follow suit ?

Some will welcome the idea of dramatic property-price falls in Oz. Just as others will strenuously disagree that it will/could happen

But are the strenuous denials about an imminent Aussie price-dive driven by fear and refusal to face unpleasant reality ?

Recently, I read the Courier Mail's Property comments-section online. Many commenters were dismissive and even personally insulting towards those who warned of a dramatic price-dive.

Interestingly, those who warned of up to a 40% price-drop were experienced old-timers who'd seen it all happen before --- even as real-estate agents and the media continued to talk-up prices

and those who insisted it could 'never happen' were migrants and/or under-30s (in other words, those who had not experienced loss of 30 and 40 percent off their property's supposed 'value')

For those interested, here's a link to current reports re: Vancouver property's day of reckoning:

http://www.businessinsider.com/vanco...ollapse-2010-7

phat-dave

where are these bargains that've dropped 30% ?? As an Aussie in Vancouver, I want to know more!!!

ps: its a load of ... ?


edit: actually, the article says home sales drop 30% not that home prices drop 30% - massive difference.

hotfuss

If it doesn't crash in Oz it'll be a world first according to this guy...

http://www.theaustralian.com.au/busi...-1225880119320

folic

http://www.businessinsider.com/vanco...ollapse-2010-7


For those inclined to take such reports seriously (maybe those who're a bit over-extended on their mortgage or who fear their job might disappear within the next 6 to 12 months) the thing to watch is sales in your immediate vicinity

because what happens is, desperate neighbours and others in your region might decide to dramatically drop their asking price

when this happens, their sale-price will become the new bench-mark for your property, like it or not. Estate agents will start your asking-price at your neighbour's sell-price

You may well protest and point out how much you paid for your property. Estate agents will shrug and tell you 'too bad, so sad', and inform you that the market (and not the price you paid) determines the value of your property

If you become stubborn (as well you might) you will sit there watching properties around you selling for a dramatically reduced price. It will seem surreal (especially for those who've been persuaded that 'property always goes up, never down' )

If you remain stubborn and leave it too late, you may well look back at what at the time were the 'insulting' offers you knocked back -- and wish you'd taken the money. Because twelve months on, the offers you receive may be tens of thousands lower again

So keep your eyes on property-sales in your region and surrounding suburbs and if you know you're going to have to get out of your mortgage for whatever reason in the next 12 months -- do it sooner rather than later. Because when property dives in Australia (and most particularly on the Gold and Sunshine Coasts) it has a history of going down to the wire -- and staying there for a long time

Mass migration saved the Gold Coast, which at the time had been in a deep trough for close to 12 years. Migrants pushed up the property prices in the southern cities. People in the cities sold for ridiculously high prices (600,000, 700,000 for jerry-built 2-bedroom slums in many cases, built in the 1920s). The southerners grabbed the money and retired to the Gold and Sunshine coasts and snapped up cheap properties there which had been languishing for close to a decade. Then more migrants bought into the Gold and Sunshine coasts, pushing prices up even higher. Many real estate agents who couldn't afford coffee in the late 90s were able to retire on the easy money brought about by the most recent Qld property booms. Migrants were suckered, in many instances. But with their strong UK Pound, were persuaded they'd won a bargain

It's to be suspected that bubble is deflating fast, despite estate agents and media, etc. claiming there's a 'housing shortage'

Brisbane people are reporting online that 13 or more houses in their streets are still unsold, despite being on the market for close to a year

So keep your eyes open and remember that estate-agents earn their car and mortgage payments from selling properties, as do newspapers (all those real-estate ads .. thousands of them, every day)

It's your life, your future, your money. No-one is going to care about you and your family as much as you do. So don't buy the BS. Do your homework. Watch the actual employment situation. Can you survive and for how long if your job disappears ? Should you sell, downsize or rent until things stabilise, etc. ? Only you know.

And remember, despite the advice about rent being dead money, there is genuine research which claims that unless you're going to live in a place for a minimum of 7 years, then it's cheaper or at least no more expensive -- all factors taken into account -- to rent

eugene43

great post

ABCDiamond

The Real Estate Board of Greater Vancouver reported yesterday that home sales fell 5.8 per cent from May.

And here is the Australian one:
June 30 2010
New home sales drop to three-month low
New homes sales fell a seasonally adjusted 6.4 per cent to 8,024 units in May
http://www.news.com.au/money/propert...-1225886141428

Very similar drop: 5.8% in Canada and 6.4% in Australia

jimbo_d

i'm sure some suburbs may have dropped 30%, but not the entire city as a whole. Some parts of Perth dropped over 50% last year, other parts gained the same, whole city didn't fall 50% though that's for sure.

ABCDiamond

But as the original article says:

• Volume drops precipitously
• Prices soften a bit

The article is talking about volumes, not prices

thedons

Dito

wilf70

Folics House Collapse Cascade Pattern and post are right on the ball.The factors won't necessarily happen in that rigid order--but they are all there.Some are already present both in Oz and the UK.Today the Halifax announced that house prices fell 0.6%[it may have been 0.8??]said sales were slow and more property coming on the market.A near neighbour[an estate agent]has been privately saying this was in the wind for sometime.
May,in the UK,have something to do with changes in CGT rates and people getting shot of their buy-to-let houses.He says there is an increasing number of these coming onto market especially at the low price/student end of the market.Top end of market still ok,but middle and bottom falling.I think prices also fell last month[?]
What matters is location[ie your area]less so the overall average which are a more general guide.Around here and Cambridge still doing well;NE and NW very much less so.Don't know about SE.

ABCDiamond

www.domain.com.au is great for seeing how fast property is actually selling, in number of days from placing on market, eg:

Days : Suburb
70 Morningside, Brisbane
72 Woolloongabba, Brisbane
89 Balmoral, Brisbane
92 Spring Hill, Brisbane
102 Hawthorne, Brisbane
129 East Brisbane
222 Newstead, Brisbane

I wonder which street/suburb has 13 houses unsold for a year ?

pomtastic

Volumes dropping 30% in Vancouver show that the house price boom party is over and the initial signs that a house price correction there is evident.

Canada is a resource rich exporter like Australia.

Kalenge

Typical ill-informed hysteria post. Re-read your own link again and also find out a bit more what the current situation is from reputable sources.

As yet, there hasn't been a "dramatic price-correction" in Vancouver. The number of properties sold has dropped 30% not the value of property.

Will property drop by 30% in Vancouver? Who knows? But you report on it as if it has already happened. So what you're really saying is "will Australia possibly follow Vancouvers possible drop in house prices?" ???

There's probably more chance of getting the right answer from Paul the Octopus.
http://www.youtube.com/watch?v=nJYv5...eature=related

pomtastic

Yes, no price correction yet and I agree the OP got his facts mixed up but anyhow, you have to realise that 30% drop in sales is not a good sign.


Housing Collapse Cascade Pattern for US.

http://globaleconomicanalysis.blogsp...0-percent.html

ABCDiamond

A 30 % drop in volume is pretty big.

It would be worth checking to see how the Australian market was affected when we had such massive drops in property sales volumes:

-23.38% Dec-2003
-22.54% Mar-2008

And these were Quarterly drops not the Annual figure that Canada is quoting.

Actually Canada is saying a 30.2% drop for the year ended June 2010.
Australia had a 28.7% drop for the year ended June 2008, and a 27.1% drop for the year ended June 2003, so we have two previous years of experience at that rate, for Canada to work out what will happen to them.

Assuming of course that the countries are similar in economy etc to have the same result.