This Housing Downturn is Over

Source? Don’t make up data off the cuff.

 

Kellyville, North Kellyville, Rouse Hill etc

 

Ermington, Dundas, Denistone.

Went to one in Carlingford too, that one was popular.

 

This post will probably upset some folk, but this is what I believe to be the state of play at the moment.

I believe, Corelogic will have the Sydney at least +5% from May 2019 trough by end of year if this weeks auctions (and last couple weeks) are a guide. Probably 10% by early 2020s to allow time to reflect it and rampant acceleration of the index at the back end of the year. It’ll probably show relatively rampant month on month growth by September/October (1%+).

And the worst part is...(for those looking to buy)...much of that gain has already happened. I.e if your buying, you may not necessarily get that gain in the index (unless it continues)...your paying for it.

The next rate cut, the assessment rate change giving every borrower an additional 10% in potential leverage, and the tax cuts haven’t happened yet either. The regulatory gas burners are on low heat at the moment, and about to fire up the housing market.

Buyers in large segments of Sydney, from the Inner West, Eastern Suburbs, South, Inner South West, Inner North, Hills, are already paying 5-10% more than Jan. Outer areas, I think the fall has stopped and isn’t growing yet, likely had a bigger way to go down in the absence of confidence/intervention.

Price Data will show it soon enough. It always does and always lags what’s actually happening.

Unfortunately when you’re looking for your home, you can’t buy a Sydney housing index. If you could, it’d be a great buy. Unfortunately for some, it probably means now may not actually be a good time to buy anymore. You may ‘time the index’ to perfect by hitting the green light now, but your paying more than you would’ve when the index was a bit higher. If you genuinely believe you are paying lower than January prices in most areas of Sydney when the index was a few percentage points higher, than your buying very very well. It may be an ok time to buy the real ugly duckling that no one wants still, eventually it spreads there and probably hasn’t just yet.

A look at the individual results across different regions bears this out.

Again, as I’ve admitted to on other posts, this isn’t reflected in hard, actual evidence yet. So it’s just one mans observation/opinion. But property buyers on the ground in inner Sydney bidding at auctions weekly, they’ll know what I’m talking about. They’ll feel it.

 

FWIW I 100% agree with the above. The areas/properties I'm looking at I believe bottomed in dec 18 and probably flatlined through to April. Exuberance is now back in these areas (unsure if it will be sustained?). I could name 5 sales since early May where price jumped sharply like 5-10%. Theres limited supply and people just pulled the trigger all of a sudden.

I'm talking median for the suburb 3 bed houses lower north. I.cant comment on apartments.

 

No one has touched on the numbers in the economy turning for retail, employment, wage growth etc

The economy seems to be struggling and any global hiccup leaves Australia very vulnerable considering what has already happened

Personally surprised to see any real upside into the next few years from here

Would be interesting to see charts if they had them on recoveries peak to troughs with averages and time frames

 

If you have a stable job and need a house...this is the time to buy.

So who really cares about economy if you hold a safe job.

Anyways keep looking at charts you will be right.

 

Not sure why your so salty over an opinion

But estimates of 10-20% recoveries in 12months might be the fastest recovery one has ever seen in property markets

I saw some value in hills district start of this year but still think a lot of Sydney especially outer suburbs is grossly over priced

 

Any rebound should be well reflected in new IO lending increasing since investors are the ones moving much of the Syd/melb markets.

Should a sharp rise happen, apra will likely step in and cap io lending again.

 

Number of withdrawn and unreported are listed with the clearance results...

 

lol...at what volume....

50% of 1500 auctions is much better than 70% of 150

The numbers been weak for a while, I do not even bother looking weekly anymore.

 

A safe job....what is that ? The dole ?

 

Totally agree.

The price you pay determines your rate of return: paying that kind of price for those locations doesn't bode well for returns in the next decade or two.

The argument for SW and NW are clear: new train lines, new infrastructures, new town centers, gentrification, ... you name it. But all of these are already well baked into the price.

The inconvenient truth is that it's still going to be highly inconvenient to live in those suburbs for a lot of people who work within a 5km radius of the Sydney CBD.

The other day there was an article that says Pitt Town was one of those suburbs that enjoyed strong price appreciation during the past 3 or 5 years (can't recall the exact detail), and when this subject came up over lunch, I noticed several guys in the office never even heard of this place, and when they found its location on the map, they just rolled their eyes and expressed strong incredulity that anyone would consider living so far out there, and at prices of over 1.5m? Huge blocks of land, for sure; but you go out west further there are even bigger sized land, all empty.

 

We had our first Open at one of our properties (in Brisbane) yesterday.

I am a KPI nut. On Friday, I asked the REA to give me two numbers, namely:

1. How many parties do you expect to attend the OPI?
2. How many do you believe will show serious interest?

She has been in the RE game for over 20 years (in the same area and specialises in the type of property we are selling), I have known her for 10+ years, she is one of the most conservative/honest agents I have met (even when providing listing prices), ...

Anyhow, she said, given the current state of the market, 8 and 2. I gave her a little flexibility and set the target at 10 and 2.

We had a post mortem after the Open. We had 11 and 6. The REA was really, really surprised.

Not so much with the number attending but was really surprised at the number/quality of those interested. She said the last 6+ months have been tough with sales. She left our place genuinely all fired up.

I know it is not a sale until the money is in our bank accounts but it was even better than what I was expecting.

... and I am a “cup half full” type of person.

We will see how the next couple of weeks pan out.

 

Screenshot of 15% number you used please?

 

Which suburb specifically? It’s exciting but Brisbane has had too many false starts in last few years.

 

I found the same, though that was Canberra. Lots of places here still taking ages to sell.

My major concern is a 30% unreported rate. Seems the unreported rate is getting higher the longer the downturn goes on. If prices really start crashing hard, at this rate, the clearance rate will be 90%.

 

I assume it might be this? Where do you get your stats standstill? This is the domain app. I can't recall off the top of my head if corelogic list their version of it too, they might.

 

Personally I find the way these numbers are calculated always feels off. More-so in a downturn too. The idea that 266 successes out off a pool of 471 potential sales is equal to 71% just feels wrong. Phrased in those terms the clearance rate is only 56%.

I understand how they calculate it but I question their reasoning for doing it this way. Especially when this stat is often cherry picked by the media and can be misrepresented pretty easily.

 

A big part of the reason why results are positive is seasonal. Another big part, and much more worrying, is the index most often reported on now excludes off the plans and any property with a 12 month+ settlement. So it just isn't capturing the very weakest part of the market, which is a huge problem, especially as that oversupply emerges.

Some studies are showing there's a huge amount of discounting going on in that market area (apartments, house and land packages) e.g. Unit prices slashed across Canberra as market downturn hits home This is discounting in new stock coming onto the market, and if the results are similar in other states (or worse, as Canberra has been the strongest market all year) then we could be seeing the hedonic index masking some serious price falls. At best I wouldn't be touching apartments with a barge pole.

On auctions, listings are extremely low, and statistically we're seeing some big swings on those low volumes. The unreported rate is also bizarrely high, and seems to be rising over time. Agents may be reluctant to report negative results, based on Australia's weird obsession with auction clearance rates.