New home sales have continued a downwards trajectory, with the Housing Industry Associating reporting its home sale index falling 5.1 percent in June. This follows a 6.4 percent drop in May.
Melbourne recorded the largest falls, sliding 10 percent for the month. Western Australia and Queensland trailed, falling 5.2 and 5.1 percent respectively. South Australia recorded a fall of 4.2 percent.
ยป New home sales fall for second month – The Age, 2nd August 2010.
She’s starting to come down look out below!
A few percent … big deal.
I love the spin the real estate industry has put on this article. Less new homes (and building approvals) = less housing supply = prices will have to rise.
The real story is Property is too expensive = people can’t afford it = people are not building
The problem is that land purchase is the big cost. It has been overvalued by valuers / estate agents / banks etc.
They have all cashed in on this overvauation for the past 10 years. When this bubble crashes as it is starting to do they will all be taken for their professional indemnity insurance which is exactly what is happening in the UK at the moment.
Although RBA kept interest rates at bay there is a much bigger problem which no-one is discussing.
J hill has already said it – People just don’t have the money ! They can’t get the credit from the banks!
We are not living in 2008 prior to GFC. We are living in a new world of credit. That is the thing these property spruikers have failed to take into account.
My friend at work got declined by the bank today for a $310k loan for a 1 bed unit.! He is a professional earning over $100k / year. Something is not right?
Not wishing to spoil the optimism of the bulls, but it’s also a case of reduced hours = less money to spend = NO chance of buying for those who might aspire to buy. For those who HAVE bought, it seems even the thought of a 1/4% base rate rise is almost horror-territory, which just indicates how very near the entire fiasco is to collapse.
Once the slide starts (seems to have started in SEQ), then the “smart investors” will be keen to realise their gains. Unfortunately so will the not-so-smart, and this situation will NOT lead to a “Soft Landing” or “period of price stagnation”. Greed causes panic, and panic leads to rapid asset value collapses. This is what happens when you treat your home(es) as an asset rater than a shelter.
Not necessarily a problem for the “one home” family, but a BIG problem for the very many “I’ve put all my financial eggs in a heap of IPs since the price of property NEVER DROPS!” brigade.
ALL investment carries a risk, and a LOT of people are about to find that investing in property can (andwill) come unstuck in a very bad way!
for those so-called “property-investors”, or in my vocabulary “pretenders”…the end is nigh !!
Did anyone see the story on A Current Affair tonight (a very reputable show…………………….)..
But, it was showing Mansions on the Gold Coast that were now asking prices up to 40% off the original asking price.
If that flows all the way down the property chain, then maybe Steve Keen was right afterall.
The Australian Property bubble had the opportunity to fall during the GFC.
However, the RBA decreased interest rates to 50 year lows and investors jumped at the opportunity to buy positively geared properties.
It is funny talking to investors who complaining about interest rates rising back up to long term averages and now they can barely afford the interest on their massive loans.
The monetary and fiscal stimulus at best provides a time delay for the inevitable fall in property prices.
Another factor to consider is that resource spot prices rebounded strongly after the GFC. If they had stayed low for any considerable amount of time then a lot more mines would have closed down, and the flow on effects of mines closing down would have been truly felt.
@AverageBloke – don’t looks at the monthly fluctuations. Look at the trend to see the direction of the market.
Robert – dont try a talk facts or trends with AverageBloke as he will still be trying to find a way to talk up the market even as it crashes around him.
I try and use sensible non-emotive words like ‘plateau’. Which is what is happening.
No you just ignore facts and fact is prices are falling and will keep falling, next set of price data will show this is the truth and the word plateau is just not applicable to this market. Just too much volume coming onto the market this means prices will just keep falling. Its ok dont feel too bad most people are only just starting to fig this out as well.
Calm down old friend. When we have a good 6 months of ‘falls’, then we can rejoice! Until then we are only setting ourselves up for dissappointment like the last half a dozen times it looked a correction was imminent.
The people that will be dissappointed are the people that have been sucked into thinking the house prices can only rise, they are the ones that are going to be paying for that bad advise for a long long time so I dont see much to rejoice as you would put it. Well latest fig’s are just starting to come out and its more bad news for house prices and the number of new loans taken out has crashed again. The number of homes on the market and not selling just keeps banking up, with spring about to hit the mass of unsold homes is going to swell fast and keep forcing prices down. You will get your 6 months of falls dont worry about that.
I hope you are right. If we have another housing price boom I fear this country will become a two-tier society hell-hole if it isn’t one already.