House prices are starting to fall in Australia, with the median national house price falling 0.2 percent in August according to the RP Data Riskmark Index.
In Melbourne, house prices fell 1.5 percent reducing the median house price to $470,000.
Brisbane house prices fell 2.3 percent to $434,000 for the quarter while Perth witnessed falls of 4.8 percent, wiping $22,000 of their medium house price in three months. Perth’s median price now sits at $460,000.
Also recording falls was Adelaide, down 0.2 percent and Darwin down 1.4 percent.
» Home prices dip ahead of likely rate rise – The Age, 30th September 2010.
Call me back when Sydney and Melbourne start to tank.
Hello AverageBloke this is Melbourne calling!!!!
Average Bloke, I guess “it’s different here” … in Melbourne and Sydney 🙂
1.5% isnt tanking
What many fail to see is that declines in house prices historically are gradual and not as “sensational” as more liquid investments like stocks etc. Most won’t even realise the market is tanking until well into the slump phase. But the result will be the same… prices will have to come back to more realistic levels.
Australia occupies 9 of the global top 15 most unaffordable metro housing markets (http://www.demographia.com/dhi.pdf). This fundamentally does not add up… something has to give…
We will pass the tipping point soon IMO with the coming rate rises. The neg feedback loop of sliding prices begetting tighter lending will emerge as per every cyclical slump. Over the next few years prices will “normalise” as investors come to the realisation there will be marginal growth in their neg geared IPs for the foreseeable future.
We’ll look back at this time and say how obvious the signs were…
That’s very true RJ. But the media have a way of making the Ponzi Market way more dynamic nowerdays.
If RBA lose their academic brains put rates up twice last 3mths of 2010…expect 10% drop in housing Melbourne/Sydney m/m Dec 2010 as the market starts putting up sale signs all at once
Start of the crash.
Does it matter? Damned if you do, damned if you don’t.
You think just because Swan stands up and waggles his finger at the banks they’re going to smile and play ball?
Of course not. Rates will continue going up this year and all through the next according to an RBA insider and the debtor fools who still believe industry propaganda will be burned.
Rates going up means a stronger AUD. With a global currency war in a race to the bottom, Australia’s higher value dollar means depreciating export demand and we know which markets kept this country afloat and have been keeping us afloat for the last decade.
But because the cost to borrow is increasing as the international currencies are being forced down, the lending industry will push the cost onto borrowers.
Nothing the government says will change that fact. This isn’t political. This is all about protecting financial interest.
For all the blathering BULLSHIT from the treasurer about ‘protecting mortgage borrowers’ what about the lost decade and more of protecting SAVERS?
Fuck them. Fuck them all. I hope each debtor/speculator fucking burns and they can eat shit.
They’ve had this coming for a long time and payback will be a bitch. As a traditional worker/saver I have not a shred of sympathy for each one that gets forclosed upon. They deserve it either through greed, or through fucking ignorance.
I rent. I invest in gold and silver (physical). Let the markets burn and purge the system like it should have long ago.
The only thing ‘different’ about Australia is that we’re thick headed and slow in following the cycle.
John Galt, please remember that both realestate and the sharemarket actually do serve a useful and valuable purpose, one provides rental housing from the private sector, the other provides a means of companies raising capital for productive uses.
The deal that has screwed all this up is the level of greed (particularly directed at realestate) through poor government policy and the general ignorance of Australians. How many times have you seen a news paper article about rising interest rates and the associated 100’s of readers comments bashing the banks over their rising mortgage costs?
There is simply too much protectionism in realestate, breeding the belief that you’ll never get burned, to make matters worse the politicians, eager to keep their jobs will try to protect the bubble as long as they can, even if it makes things worse in the end. In effect we are a two speed economy as the economists keep saying, resources and realestate, neither being an eternal savior for this country.
Hitting the skids is simply a matter of time.
There is a fine line between ‘need’ as a demand of the market on rentals and ‘need’ as in ‘prohibitive PPOR cost’.
The market has been purposely distorted to be milked. Whilst we can assume that private rental accomodation supply is a ‘necessity’ in the market, it’s because of direct manipulation of supply, not because there are people who would prefer to rent.
Under Australian tenancy laws, you’d have to be a fool to believe that you’d be better off than the PPOR owner who has every law and policy market in their favour.
It’s a rigged game, top to bottom with every tier of government and private industry all on the bandwagon for their slice of the action.
Was it just the small time debtor chasing the easy bucks that was at fault? I don’t think so. They played their role the same as they always play (the greedy opportunist) only as far as the system allows them to.
Government and Bankers have destroyed the traditional market and created an imbalance in the Australian economic and social climate that will be felt for generations to come.
We need to haul out the guillotine and settle this matter in the manner of a good old fashioned bloody revolution.
Whilst the instruments of control and manipulation are used for malign purposes rather than good, it’s impossible to argue for them to remain in effect.
Negative Gearing is a classic case in point. It’s not even closely used for it’s intended purpose, but rather a legal tax evasion loophole used to bleed the public purse for private profit.
It needs to be razed to the ground and built anew, else it’s just another misused weapon presenting a clear and present danger to the entire system.
This country is headed to disaster because of the malign intent of policy makers through a conflict of interest in their private wealth circumstances. You can’t trust any of them to create fair and equitable policy when they are themselves gaining from the manipulation.
Nothing will get better until it’s fixed.
John Galt, your comments made me laugh. Which is probably the only thing left now. I too have been a saver for the last decade. But I worry that all the people who have blown this bubble up will take everybody down with them.
With so many vested interests desperate to maintain confidence, pushing this situation to extremes, there really can be no other way for this bubble to go than ker-blammo. I sometimes wish there was an Atlas Shrugged style community where people could quit “capitalism”. I know you probably think that is the function of buying gold and silver… I’m just not convinced by that. I wish I was, and I genuinely wish you the best of luck with that.
Romsey, you’re right about the greed. Nothing keeps the populace in line better than a big fat 25-30 year mortgage around their neck. The government held out the candy. And Australia licked.
John, I suspect that there are people who panic (and hope that other’s do as well) in order to profit from others loss. You appear to be one of these people. What about the Gold Bubble that is developing. While you are berating the average home owner for having an asset that has increased in value well in excess of historic trends, you are looking to profit on the growth of a metal and betting that it will grow in excess of historic trends.
Maybe worth taking a good long hard look in the mirror.
I do believe that the property market will slip over the next couple of years and possible drop ten to fifteen percent further than the ten percent we have already dropped.
This will lead to several further years of flat market, followed by some growth back to normal levels of four percent or so.
Good luck with your obvious issues John – if you are really this angry maybe “Beyond Blue” or similar could be of assistance.
John Galt,
“Fuck them. Fuck them all. I hope each debtor/speculator fucking burns and they can eat shit.”
I stand and salute your eloquence!
yes indeed, the speculating dumb asses of this country and the fucking governments and their policies that make it too risky to buy a house should all have armageddon served on their asses.
decoupling house prices from income levels through stupid tax benefits and then offering fhb money to step into an inflated market, what insanity!
its disgusting.
bob,
gold is not a fundamental requirement – I dont need gold like I need accomodation. hence there is no forcing people into the market. its totally different.
yes I know Im not John, but thats what I think
To John Galt: I couldn’t have said it better myself… your post really made me laugh!! THANKS.
“You think just because Swan stands up and waggles his finger at the banks they
Negative Gearing and Salary Packaging has to end.
These two ‘tax loopholes’ people use cannot be sustained as the country needs to support an ageing population.
does anyone know how I can buy gold through the ASX?????
FHB, you buy actual gold through places like the Perth mint, google them.
FreeWilly, the masses enslave themselves through their own greed, no one forces them to have iphones, expensive cars, big houses, or other status artifacts.
Remember that if the US economy does finally go broke then I doubt even gold will save you, you can’t eat it or have it shelter you. The next big crash will be beyond bailout-ability.
The world has reached an interesting stage never before seen……. never have there been so many old people around the globe before….. all expecting free handouts, shelter, health, ect…… never before has there been such a drain on resources with nothing given in return. It can’t last and it won’t. Realestate has simply been one small part of this modern mess.
FreeWilly,
There are just so many vested interests with so much at stake… why stop at two?
@Romsey
“FreeWilly, the masses enslave themselves through their own greed, no one forces them to have iphones, expensive cars, big houses, or other status artifacts.”
How about any kind of house? Average house prices 500K, Western Sydney average house price 350K+ (3 Bed Rooms), we are not talking about McMansions these babies were build in the 70’s and 80’s e.g. 30-40 years old!! in 1995 going for <100K. This isn’t greed anymore its about not being able to own modest shelter for your family.
As for gold, I’d rather have a few bits tucked away. A gold coin or a wheelbarrow of money for a loaf of bread (weimar republic)
@Chief Squirrel
Yeah I forgot about the other 50 hangeroners.
POP POP POP
“With so many vested interests desperate to maintain confidence, pushing this situation to extremes, there really can be no other way for this bubble to go than ker-blammo. I sometimes wish there was an Atlas Shrugged style community where people could quit
To illustrate John’s point.
If rather than buy my house in 1995 (for approx $280,000) I bought gold, it would have equated to approx 727 ounces with the price of gold at that time being about $385 / ounce (yearly average).
Today, with the price of gold what it is, the same 727 ounces is worth approx $908,750 at an average price per ounce of $1250. The price of the house today in 2010 dollars is approx $800,000. The gold has about the same or better buying power as that it had in 1995, but my cash on the other hand has devalued by more than 200%.
Here is the kicker, have average wages/salaries increased by 200% over the same period? And if I had put $280,000 under my mattress back in 1995 what is it worth today!? (a hell of a lot less).
For gold price prices see http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx
John Galt said: “This current market structure is anything BUT traditional capitalism. Galt
Romsey; it is not “greed” that was a major contributor to the bubble. That’s like saying gravity causes plane crashes. The bubble is caused by loose monetary policy, ie credit expansion/increase in the money supply. This occurs due to central bank/government policy. This has been the case with all previous bubbles throughout history. This is the view held by the Austrian School of economics and is by far the most accurate explanation.
http://www.youtube.com/watch?v=AUFXG-q1IHc&feature=related
Chris
Bob from Wynnum; Gold is undervalued by all measures. When observing the economic fundamentals, ie currency devaluation/inflation, global outlook, gold as a historical commodity money etc. Then gold will only continue to rise for as long as the current trends continue. Adjusted for inflation gold should be at around $2,500 p/oz.
View my video blog on why gold isn’t in a bubble:
http://www.youtube.com/watch?v=50S87hykxg8
Chris
does anyone know how I can buy gold through the ASX?????
Who crashed the economy? Greenspan. Most posters seem to have it figured for what it is – froth and bubbles. However, as long as China keeps buying (and selling), Australia will remain amongst the best-positioned. Resources are a no-brainer, but can be a money spinner. The Fed is to blame for the current US mess. They quite simply allowed too many unsustainable bubbles by bending to the will of their political masters – the Fed is non-government by definition alone. A lot has changed in the ten-plus years since the Fed under Greenspan lost the plot. Short-term policies do work, but usually only in the short-term. Living off inflated asset prices can really only continue with currency devaluation when the underlying economy is shrinking. When you have the reserve currency it is difficult to devalue, and they don’t want to for reasons of prestige. An upwards revaluation of the Yuan is obviously needed, and is a defacto devaluation of the USD. I will be very surprised if that does not happen, however China is very reluctant for obvious reasons. Big government only works in a thriving economy, and no economy stays that way forever. Australia is fortunate to have a virtually hung parliament else big-spending Labor would continue to buy more elections until it ran out of dollars (eg. NBN).