Figures from the ABS on Monday showed Melbourne was the star performer in Australia’s Real Estate markets. For the three months to September 2010, prices rocketed 2.7 percent in Melbourne, way in front of the next best result of just 0.4 percent (Perth) and with the majority of capital cities going backwards. If it wasn’t for Melbourne, National house prices would have too gone backwards in September.
The spot light is now firmly on Melbourne. Today, auction clearance rates dropped to 61 percent according to the REIV, after recording a 67 percent result last week. Clearly, interest rates were on the mind of buyers, after the Melbourne Cup rise.
Enzo Raimondo, CEO of the Real Estate Institute of Victoria reports :
Saturday 6th November 2010
The interest rate increase has certainly had an impact on buyer confidence this weekend with a clear drop in the clearance rate compared to the past few months.
Some buyers will be concerned that more banks will increase rates independent of the Reserve Bank.
This also means November is shaping as a month with good opportunities for buyers; with 588 auction results reported this weekend, 920 expected next weekend followed by two weekends with just over 1000 auctions. This will see around 3600 auctions in November, the highest number of auctions in any month this year.
The real test for Melbourne is how they will get through the rest of the month. After the public outrage over the Commonwealth Bank almost doubling the RBAs rate rise, many banks are expected to pass on the hike this week after the dust settles. Melbourne also faces an oversupply of properties with 3600 auctions this month, the most this year, as speculators promptly head for the exits with hope of locking in some impressive capital gains.
ยป Weekly Auction & Sales Results, Market Overview – The Real Estate Institute of Victoria, 6th November 2010.
AND THE BUBBLE BURST BEGINS. MARK THIS DATE AND MONTH!!!!!!!!!!!!!!!!!!!!!!! They reckon rates will go up a full percent in 2011. I bet they go down and we will get another statement from Sir Glenn that they got to agressive on rates. He said the same thing 2 or 3 years ago when they started dropping them. I am glad rates are going up so housing will come back down to earth.
Must say the volume of listings has now exceeded the early-mid 2008 bloodbath by 30%.
Check http://www.sqmresearch.com.au/graph_stock_on_market.php?region=vic%3A%3AMelbourne&type=c&t=1
That said, it’s early days and I personally haven’t seen any evidence of the discounting we saw back then. I wonder if this could be a factor? http://ozhouse.1688.com.au/epaper/mpw/
I agree , I believe you can say the bubble has now burst (subject to no government interferrence)
http://theage.domain.com.au/auctions-stall-as-rate-rises-shatter-buyer-confidence-20101106-17i8w.html
Auctions stall as rate rises shatter buyer confidence
“MELBOURNE’S property market has suffered its worst setback since the height of the financial crisis, with the auction clearance rate falling to 61 per cent yesterday.”
Arthur, I think why there hasn’t been the level of discounting is the lack of panic at the moment. Back during the GFC, Lehman Brothers has just colaspsed, share markets were plumeting, people were running on the banks. There was this sense of urgency that you had to get out quick smart.
No I disagree … not yet.
So the Average person has just started to look at how much debt they are in and are faced with the real chance of falling prices and even higher rate to come. How long do you expect the average investor will continue to hold out for current prices until they say just sell the interest is killing me and the falls begin? We may have just steped off the cliff! guess we will know by xmas.
If property was such a great investment – why would there be so many on the market?
For the region of Melbourne – is there a breakdown if the listings are outer suburban or inner city?
It’s funny that everybody keeps saying that there is a housing shortage, yet you are seeing huge numbers of properties for sale in Sydney and Melbourne. I think over the coming months you will see supply outstrip demand.
I don’t think we’re in for a housing crash as our economy is strong, but a slow down nevertheless with house prices slowly falling.
Hmm dont get too excited yet. I was travelling through a nearby suburb just yesterday and I couldnt believe the amount of renovation and sub dividing going on. Nearly ever second house in the street was either a new home on a subby or a full reno. All these homes have gone from un-improved workers cottages around 250k 5 yrs ago to around 700k+ and this is in an average suburb 11klms from Brisbane CBD.
Sure people arent buying but they are still building up wealth waiting for the Ponzi Rocket to return. China will keep the current Ponzi going for a few yrs yet.
It’s nice to see the flood of articles covering everything from record repos in QLD to struggling home owners and bank bashers….. in one respect I’m happy, I mean it’s not like you couldn’t see this coming right? I must admit, the majority of the population are the biggest morons on this earth…. in particular an article in the money section of news.com.au caught my eye, the main quote being:
“already working overtime and cancelling holiday plans to cover his repayments, which eat about 85 per cent of his wage.”
Read the full article at :
http://www.news.com.au/money/banking/home-owners-angered-by-increases-in-interest-rates/story-e6frfmcr-1225949164477
These are the people who are bank bashing and complaining…..
Oh Gee, I didn’t think interest rates could actually move up…. only down… think about it, these people because they out number the rest of us directly affect the financially policy and standing of this nation, when voting. Already those who lend to Australia are seeing all the bad behaviour of the masses and are becoming concerned about lending more….
Note to average Australian, you do not set interest rates.
‘it
Romsey, these morons deserve whats coming at the end of the day it was their decision to compromise their standard of living so they can own their own home. If they had been renting or bought a 2 B/R unit they wouldn’t be in this situation and would not be struggling. At the end of the day people must live with the decisions they make, good or bad and stop blaming the banks for their gullible stupidity.
Brad – the situation described is inevitable, and I know I’m happy that its not happening to me, and finally the market may return to normality. If a few stupid eggs get cracked in the meantime, it might lern them a lesson.
Care to describe how you see the endgame playing out, with no-one getting hurt?
Exactly – I’ve been saying this for a long time. I would love to see FHB statistics by ethnic background and IQ level.
There is a very big part of new Australian ‘wog’ & ‘asian’ culture to buy property – mainly because we are the ‘lucky country’ and many of these people could never buy property in the respective countries they came from.
So you add that mentality, with 40 years of capital growth, and the younger generations typically invest in property due to family pressures. A lot of the elder family members have even provided guarantees to ensure that they can borrow more then 50% of their income.
Anyone with half a brain, or with a more traditional australian mindset gave the home buying space a mindset ages ago…
I do see people getting hurt and dont see property as an investment anytime soon. IMO i think it will be a rollercoaster for a few years and prices will fluctuate 10-15% each way of the current value. I also think its a shame that some people were drawn into buying without knowing what they were getting themselves into. I’m just not one to stand on the sidelines and laugh saying ‘i told you so’
Brad,
My concern is for the greater economy of the country, if the economy does well then the government can in effect provide for the elderly, the disabled, and others in need as well as improve infrastructure, ect..
On mass, people who make stupid financial decisions can collectively derail an economy and send it into a tailspin, the worst case being a depression. Unfortunately the masses also vote, hence it is possible for them to damage the future of a nation with selfish decisions based on short term greed, which is what is happening in Australia at the moment.
Damage primarily through the excessive flow of money into unproductive real-estate.
For more than a year serious warnings from various financial bodies including the RBA have been sounded, yet the stampede into this bricks & mortar nivarna has continued unabated…. till now. Much damage has already been done, not just to our economy, but to our international image, with all these bank bashing stories.
The next decade will be probably the most financially interesting in the history of humanity, we are so close now to the big one (depression) that it isn’t funny…… the USA is so close to going bust…… never has there been so much global debt…
In the end we will all pay, even me, despite my responsible attitude towards debt, saving, and associated decisions, it is this that I think makes many people who visit this website a little angry, kinda like you having to do time for a crime that someone else committed.