House prices fall at fastest rate in 35 years

House prices fall at fastest rate in 35 years - Australian Financial Review

House prices are falling at the fastest rate in 35 years, increasing the likelihood of a disorderly market correction and economic recession, according to global investment bank Morgan Stanley.

In the last three months of 2018 Sydney property prices fell by 15 per cent on an annualised basis, followed by Melbourne's 12 per cent,with big falls posted in other major capitals.

Could be some bargains once prices start to bottom out in 24 to 36 months ....

 

I wouldn't call an overpriced property market correcting towards fair value as "bargains"..... they are just trending towards the price point they should've been.

 

But if you were born yesterday (like all millenials), you'll believe it's a bargain.

 

Yep media catching up to on the ground feedback - December was brutal.

What happened I think:

- There's little investor demand. So properties that aren't attractive to investors are very hard to sell. Supply > demand for these substantially.

- These properties lingered.

- Owners wanted to sell by year end, and vendor expectations got realistic to meet market.

- Locally we've seen plenty of 'investor' properties (overshadowed, main road, etc) go from priced at $1.3mill in June (always optimistic) to selling at $1mill in Dec.

- Data now reflecting this.

In general, December was brutal. Spruiked between it all, great owner occupier properties held up well. Its definitely creating a market for purchasing something no one wants and doing it up to meet the current market. There's a big price gap opening up.

 

If this rate of price falling keeps accelerating at the current rates, property will be FREE in 3 years time .

Still won’t be affordable to some .

 

It would not take a genius with a bit of imagination in detecting patterns to see ---if this keeps up then Labor will walk into a basket case..

 

I can finally buy that mansion in the eastern suburbs for 500k soon.

 

Good article overall.

But very cheeky (and meaningless) to annualise the last quarter's falls and say that property is down 15% in Sydney. In some quarters the falls will be fast and other quarters the falls will be slow. In some quarters prices may rise even if the broader market is falling. We shouldn't fall for that sort of thing. But the point of the article is taken.

 

They will then want two for the price of one.

 

if property follows the typical cycle patterns,if they do drop down to "fair prices"
it would be a good chance to buy in and prepare for the next boom

 

There will be a next "boom"? My simple thinking:

- Australia got rich off the opening up of Mainland China which was once very poor. Effectively this was a new frontier.
- Mainland China developed and due to huge numbers they were over purchasing into Australia.
- This effectively also pushed local Australians to push the prices up and here we are.

Please critique my thinking...imho to get to the "next level" of ridiculous prices or "boom"

- You'd need a huge scale of influx of capital, think large countries like China or India or both.
- For China it would have to 'graduate' to the next level i.e. exporting medium to high tech sectors. This means dominating in the world of cars, state of the art electronics and machinery, they haven't reached this level as yet.
- The Ultimate level would be state of the art weapons and commercial aircraft, a long way off before that boom sets off.

But on the other hand many have become adept at working out not to overpay for properties now and also it's becoming less attractive to do so.

My 2 cents:

Some suburbs of Melbourne will fall back to what "real growth" would had there not been a boom cycle but won't bust to ridiculous levels e.g. My friends' place in Glen Waverley was purchased for $500K in 2005...quite exxy back then on a 850m2 block, it will never return to those prices. However, it would also never quite go back to the 3-3.5k per sqm (approx 2.5mil to 3mil) just for the land during the ridiculous boom times.

 

Currencies always lose value, prices always go up (prices not values). We have central banking to thank for this.

If there is a recession, they'll print. If there is a boom, they'll print. When all you have is a hammer ....

 

@Sackie - are you selling cheap?

 

I hear ya, every cycle, people/experts says this time is different, as you said the influx of china money this time along with the Mining boom as well,

this time we had the apra, and reducing of china money "contribute" to the slow down,
I also cant see what the next boom will be attritubed so maybe booms will be far more subdued than the past
but I agree, $500k in glen wont ever happen again, the people who missed out at $1m will be pouncing on it well before it gets down to that price

I walk through the shopping centres of melbourne, and even when its supposedly tough times sometimes the shops all seem to be full,
yet when there is confidence in retail spedning, the shops seem to be quite empty too

i too am confused as to where all this confidence comes from,
I walked through chapel street a few months ago, and it was a very sad sight

 

But that's the thing because these days earning 80K+ is a "normal" thing. As a kid in the 80s and 90s people made a big big deal out of being a millionaire and earning 100K+ upwards was unheard of unless you were some executive. This is why prices will never drag back to a 500K range for GW for example.

When my friend bought it, the person who sold it to them bought it for $50K or so back in god knows when and that price my friend thought was never to be repeated again.

The way the gov is thinking these days, it'll more likely be a boom in outlaying areas of Metro Melbourne as they want to push people out. I see Syd/Melb becoming like a mini London/NY where you've got ridiculous prices only available to those that got in early and for the nouveau rich from all other areas moving in.

 

Did we have some kind of boom from Japanese investors back in the 70s?

 

Wasn't that 80s?

We did but more Queensland than Vic.

Fewer Japanese but I think it was more commercial and theme park type land. Japan is much better to live in than China so there was much less impetus to move out.

 

I did some reading of london and some european countries where virtually the prices are so high everyone rents, and they dont have "great australian dream" mentality,
economically, there must be some point where prices get too high and unaffordable that prices cannot grow due to the lack of buyers,
however maybe its the aussie mentality thats preventing from the generation to become a renters mindset

maybe someone with economics expertise could explain

 

Gold Coast was awash with Japanese money.
Iwasaki resort was built near Yeppoon, just one example further away.
But I think it was the 1980s.
Marg

 

Rental and lease conditions are very different in Europe. Three and five year leases are common, some even longer. Many apartments are leased without kitchens, you fit your own, and remove it when you leave. Evictions are virtually unknown, and the tenant is free to paint and redecorate as they choose while living there.
Marg