It wasn’t all that long ago, that Real Estate experts were telling us that house prices can’t fall in Australia due to a “chronic” shortage of homes. They said the stark reality is we are not building enough homes to meet demand from our growing population, and this shortage will put a “floor” under prices.
But what a dramatic change there has been in such a short period of time.
According to the ABC, REIWA deputy president David Airey says there is a 40 per cent over-supply of homes in Perth. In fact, there is such an over supply of homes, the Real Estate lobby group is pleading with owners to take their properties off the market.
The ABC writes :
The Real Estate Institute of WA is warning property sellers to take their investments off the market or risk selling below their asking price. REIWA figures show property sales in Western Australia are down 30 per cent compared to last year.
ยป Property sales slump 30 per cent – The ABC, Monday 22nd November 2010.
The media in Australia did its best to promote a very distorted view of what really is going in the Australian property market. (It also does this in many other areas as well). A fictious account designed to appease certain vested interest groups (ie Lenders, Real Estate Agents etc).
The REIWA, in a statement reeking of market fixing and price collusion urged sellers to “take their investments off the market or risk selling below their asking price”
Taking your property off the market would help you sell it at a higher price apparently. I just dont get it.
I agree – it doesn’t make sense that taking your house off the market will get you a higher price. If anything, you will loose out as I suspect the market is down from here on.
It’s contrary to RE agents in Queensland. RE Agents make commission on turn over, hence telling people to take houses off the market will only reduce protential turnover. In Queensland, Agents are quite up front saying there will be a bigger than normal crash, and that you should sell now at reduced prices to lock in a sale, otherwise the longer you sit in the market the more your property will decline.
Funny how at the same time, there is an article with the industry asking for a tripling of the first home buyers grant to encourage more housing construction. Oversupply or undersupply, which one is it?
Clearly, there is actually an oversupply, and they are trying to recycle the undersupply arguments to get some price support. Unfortunately, I don’t think taht tehre is much future demand left to bring forward, and even if tehre is, it just sets things up for a bigger fall later on.
Hang on there is an undersupply all over the country. Never trust the govt or RE agents. I think Australia is in for a bad bad bad property burst. The sad thing about all this is the people with families that will lose everything. Goes to show always save for a rainy day. To many people out there just spend spend spend. I have so many friends that have taking so many equity loans for holidays, cars and other stuff that they really didnt need it. Then you got China starting to slow down as well wonder what effect that will have on WA and Qld.
RE agents will always say what gives them the best chance of getting you to sell your property plain and simple. They should act with the vendors best interest but the sad fact is they are only ever acting in a way that will make them money
this is because they need turnover to make a go of it and dont give a dam who they have to screw over be it the vendor or buyer because if they dont they go out of biz! I dont think much of the RE agents but in the end we have to make up our own mind as to whats a fair deal and so we should not just blame the RE agents but blame our selves for the system we have excepted when it comes to realestate deals. Changes to the whole industrie are needed as RE agents should only make a set fee for each sale on a property then 3% of what the property sell for above the reserve price! This would help control things a bit more IMO.
Check out the link Craig alerted us to in “Bad Weekend” comments. You will see the crash could already be here. FACT: Many more properties for auction compared to same time last year and very low percentage sold comparatively. Published auction clearance rates are skewed by the excluded (and currently exceptionally high) number of properties withdrawn from auction. The undersupply is looking like easily becoming an oversupply by Xmas! Popping or popped……?
The link Sikarenting is referring to is a post from “Black Dragon” in the credit crunch forum talking about the APM results. I believe Black Dragon is Louis Christopher, a former General Manager & Head of Research for Australian Property Monitors (APM). He is now SQM’s Research Director.
He got some air time in this article :
http://www.smartcompany.com.au/property/20101122-property-prices-will-fall-as-unsold-stock-levels-soar-experts-warn.html
“But Christopher says these figures may not be totally accurate. He points to the APM figures which show that almost half the auctions in Sydney and Melbourne went unreported. Taking those figures into account, he claims the auction clearance rate could be much lower.”
“After you take the unreported results, it could be that clearance rates may even be in the low 40% mark…. these clearance rates spell a very weak market.”
“I don’t think we’re seeing a panic, but we’re definitely heading into what I would call a housing downturn now.”
Make no mistake the market is already correcting.
http://delusionaleconomics.blogspot.com/2010/11/investor-trap.html
Just because the government refuses to acknowledge the problem; and the massive systemic risk and moral hazard created by the australian delusion that housing speculation is a path to prosperity, makes no difference.
This is going to drag the Australian economy into deep deep trouble. Right now there is a need for strong economic leadership and a swift change in policy direction. But there is no way we are going to see that from the current players, so we are in trouble.
Economicdelusion is right on the money there. I really believe the average Australian can disconnect from the Americanisation of our credit world here in Aus. I find it alarming how the bankers, regulators and politicians here are sitting on their hands while they know the foreign housing market experiences played out so grimly. Surely there’s a few honest high ranking regulators that can lobby for sensible change. Scrapping or trimming negative gearing even just a bit would surely help the budget to balance
quicker and possibly re-divert funds to more productive assets?
You can’t do that, it would make too much sense.
Just an interesting bit of triviality…today I had someone come to my home for trade work, and I was informed that they deliver the Manly Daily with their teenage kids. It’s an interesting FACT that apparently, this is the first time in 70+ YEARS that the Manly Daily has required paper deliverers to manually incorporate the property section. Bottom line: it’s too thick for the machines!!!…First time in 70!!!!!!!!!!!!!!!! years!!! Popping…or popped????????
If you missed this one http://www.smh.com.au/business/property-lessons-from-the-uks-busted-boom-20101129-18dju.html take a look.
quote “The notion that properties may be valued
Free Willy,
I think your comments mesh well with the following article, which in it’s own right, is the root of all personal financial problems in this country.
http://www.theage.com.au/money/money-matters-but-we-fail-the-test-20101130-18fb1.html
Sounds like crazy talk to me. I have never understood why people take advice off these cockroaches. You can’t blame REIWA though. It is only logical to refuse advice from those with a vested interest. REIWA is concerned with selling houses, period. They are not concerned with consumer interest and I chuckle at the thought of their expertise.