It’s The Ending Of The Boom
A report from Nine News in Australia. “The Reserve Bank, regulators and the government have got their wish. Property prices in the white-hot Sydney property market are starting to recede. The problem now for those regulators - and for first home buyers and others who are keen to get into the market - is how much further the market has to fall, before it settles. Like a puddle, if you don’t know how deep it is, you don’t want to jump in. What Australia does not want, does not need, is a housing price collapse. That would trigger unemployment and possibly the first recession in more than 26 years. What Australia needs is for the regulators to be right in their judgment: that they can quietly take the steam out of the market, without triggering a bust.”
From Domain News. “John Okgrolic, a train guard who lives in the western suburbs, is one Sydney property investor who has already anticipated a shift in the market. Worried about future price falls, he is now planning to sell his investment property in Cronulla, which he has held for 15 years. ‘We’re at the top of the market … I’m jumping ship before it hits the iceberg and sinks,’ Mr Okgrolic said. ‘When house prices have grown so fast compared to wages growth, you know something is wrong. You’d have to be blind and drunk to not see a fall in prices coming.’”
“Domain Group chief economist Andrew Wilson said the quarterly fall in prices were unsurprising, pointing to lacklustre auction clearance rates and a crackdown on investors from the banking regulator, the Australian Prudential Regulation Authority. ‘The market has flattened. It’s the ending of the boom,’ Dr Wilson said.”
From News.com.au. “New housing figures showed median unit prices have been dipping in areas such as the inner west and Sydney’s south over recent months following a mass exodus of investors from the market. Price falls were the largest for apartments in the council area of Leichhardt and the Botany area in Sydney’s south. Unit prices in Leichhardt suburb Lilyfield dropped 25 per cent over the three months, while in neighbouring suburbs Rozelle and Annandale the falls were 8-10 per cent.”
“All these areas are nearby a number of major unit developments, which have increased the selection of homes available to buyers. Real Estate Institute of NSW president John Cunningham said the changed conditions were allowing buyers to be pickier. ‘If they don’t’ see value, they don’t buy,’ he said. ‘That’s a very different situation from last year when people were concerned they’d miss out unless they bought something quickly.’”
From The New Daily. “Last Saturday I oversaw the auction of my grandmother’s house in a south-western suburb of Sydney. And it was not the exuberant fireworks display I was hoping for. The word ‘fizzer’ comes closer to the mark. At first, things looked promising. A healthy troupe of (what looked like) bidders turned up and poked about the place – measuring doorways, peering into cupboards, making sure the toilets flushed – before congregating in the backyard.”
“At the advertised time, the auctioneer strutted onto the lawn and delivered his spiel. After puffing the old place up until you wondered why the Queen herself hadn’t snapped it up pre-auction, he asked for an opening bid. Silence. ‘Did I mention how quiet the neighbourhood is?’ he cracked.”
“A lacklustre titter or two, then more silence. Finally, after an excruciating lull, a furtive voice piped up with an opening offer. It was well below the reserve, but it was a start. Peaking out from behind the dining room curtains, I rubbed my mitts together and waited for the bidding war to begin. Nothing. One bid was all we got. One bid! So much for the exuberant Sydney property market.”
“House price growth in Sydney has been astronomical, and wildly out of step with the rest of the economy. This growth has made a lot of people wealthy. But it has burdened others with absurd levels of debts, and shut yet more out of the housing market altogether. So, while it may be a bit disappointing for homeowners who are coming to the market just as the party is ending, the fact is this is a cooling that absolutely had to happen. As long as it is a gentle cooling (which so far it has been) and not a crash, it should be welcomed.”
“As for my grandmother’s house: eventually the auctioneer and her real estate agent managed, in private, to talk that one furtive bidder up to the reserve price. A bit disappointing perhaps; but, still, it was a much better price than you’d get for the same property anywhere else in Australia – not to mention a 7000 per cent return on what my grandparents paid for the place 50 years ago.”
