VIC Melbourne price correction - post examples

I've been noticing builders around the Coburg area rushing to finish off their projects. On my street, a 3 unit development(on a 665sqm ...) has tradies coming in and out 7 days a week.

 

Does anyone know Highett well?

It seems that as an area it had a big ramp up in the boom. Median price is listed at 1.3. Looking online it seems that of the 30 odd houses in Highett, 25 are under 1.3mil and maybe 10 near 1mil.

Just a glut of stock, or have they trimmed 100-200k in the area?

 

We have already seen 7%-10% correction in Melbourne roughly ...

I reckon expect at-least another 5%-7% easy!..

Cheers,

 

Thats could also be a sign of too much work on/making hay well the sun shines. Wouldn't be reading too much into that.

Also in terms of building etc the local council here is not keeping up with demand of new applications, or so the planners from the council keep telling us

 

Think developers/builders usually look to make 20% profit off whatever project or build they do. In a bear market they may be happy to discount that just to keep things going. There would be many tradies competing for jobs too and charging less just to get some work.

In a bear market, it would make sense that there's less demand for construction materials so materials might get discounted massively just to get the inventory out the warehouses.

So all these could result in further drop in building costs. And if goods/services cost less, gst u pay goes down too.

 

Thats not far from 20% drop .. crash territory..

 

20% is a correction IMHO - a crash is 40%+ down or 50%+ down for Sydney/Melbourne given they increased so much.

 

People are still getting finance for new builds... but there has been a noticeable drop in demand over the last 5 months.
Also clients that committed to building months ago now cannot borrow as much, so are settling for a smaller design or holding off to save more funds.
I’ve worked in the industry in Melbourne over the last 12 years and this is the quietest I’ve seen it in the whole time.

 

Just not sure if you will call it a crash or correction?

Correction I'll say!.

 

This makes sense. I suspect it may take some time though for the pipeline of work to dry up.

Also, the big builders will probably give extra "value" in bonus features etc before visibly discounting.

 

Sydney house median index at its peak was at 182 in Oct 2017. It was at 100 in 2011/12.

For it to give away all it's rise since 2011/12 it needs to fall just by 45% from its peak.
i.e. 45% fall from 182 takes it to 100.

 

Call it a very minor dent if you like, what's in the name, but a 20% fall from its peak is still a loss 36% of its gain.

Note:
20% of 182 is 36.4, (wrt. 182 was CL Syd house index when it peaked in late 2017 and it was at 100 used as a base for 2011/12 price),

 

Arguably going back to its value of just 12 years ago is a correction not a crash.

 

I’d consider it a crash. Losing 12 years of gains is the definition of a crash

 

Agree, semantics are not important.

Individually, whether it's a good thing or a bad thing depends on your circumstances.

For the overall well-being of the country? Probably a good thing as long as it doesn't have a drastic impact on the economy as a whole (and it doesn't seem that most "experts" are predicting that kind of economic Armageddon).

For the collective on PC? With the odd exception, I think most here are probably fairly well-prepared. So neutral to good I suppose???

 

From reading everyone's thoughts, it's very much down to where you're at right now. We started investing in 2016 and had already missed what we saw as the rise of Syd and Mel, so went to Brisy. For us, we're waiting to pounce on a PPR in Melbourne in late 2019, so it's arguably going to be good for us. Or at least, we won't get hit with the double whammy of missing the ride from 2012, and then jumping on the merry-go'round at the end of the ride, when it was clearly done. For those that can hold, it will work out. We know some are over-invested and relying heavily on 'equity'. These guys are a concern. I hope they do manage OK.