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There Wasn’t Much Competition, The Price Seemed OK, There Were Just Really No Buyers

Two reports from ABC News in Australia. “Homeowners are holding off selling their properties, with fewer new listings than at any time in the past 12 years. The slowdown is most noticeable in Sydney and Melbourne, where there are 30 per cent fewer properties for sale than there were at the market’s most recent peak.”

“The slowdown is being felt even in gentrified suburbs such as Yarraville, in Melbourne’s inner west. Property investor Dana Sawyer spent $30,000 on a renovation before listing her three-bedroom house at $800,000 to $850,000. But the house went on the market just before the election and failed to attract any offers.”

“Ms Sawyer said she was surprised that potential buyers were so hesitant. ‘Everyone was very nervous; it seemed like people were just reluctant to do anything,’ she said. ‘There wasn’t much competition, the price seemed OK, there were just really no buyers.'”

“Local real estate agent Adam Welling said Melbourne buyers had become reluctant. ‘Even if it was staring them in the face that they should buy the home, they weren’t pulling the trigger,’ he said. He believes buyer reluctance has become so widespread it has led to owners delaying the decision to list their homes for sale. ‘A lot of vendors are worried that their home won’t sell, because the buyers aren’t making buying decisions,’ he said.”

“In Sydney, retirees Tom and Larissa Bergmann have shelved their decision to downsize, due to the sluggish market. They have lived in their house on a quiet street near Botany Bay for more than 20 years. ‘When we first moved here, the prices were going up and up all the time,’ Larissa Bergmann told 7.30. ‘But lately it’s pretty levelled out and possibly even — what would you say, stagnant? Lowered? Yes, definitely lowered, that’s for sure.'”

“In Sydney’s apartment market, a perfect storm is brewing. According to SQM Research, rental vacancy rates across Sydney hit 3.4 per cent last month — the highest level since 2005, the year it began keeping records. Vacancy rates in The Hills district hit 5.8 per cent last month, with some parts reaching as high as 7 per cent.”

“Data suggests 54,000 new apartments built in Sydney during 2018 and 2019 will be up for grabs by the end of the year, causing an over-supply. My Housing Market chief economist Andrew Wilson, said it had created what was known as ‘a ‘ghost-tower’ environment.”

“He said an underperforming market with a lack of buyer activity had been exacerbated by a lack of tenants. ‘It’s all combined to create those empty towers,’ he said. SQM Research chief executive, Louis Christopher, said another element adding to the ghost-tower scenario was that some foreign investors bought properties to keep ‘as a storage of value.'”

“‘It’s like buying a gold bar,’ he said. ‘They’ll buy and hold and keep it shut for the whole duration of their ownership.’ Mr Christopher said some investors preferred to leave their properties empty to avoid ‘wear and tear’ and make it easier to sell them quickly when the market turned.”

“Apart from adding up rental vacancies, listings and anecdotal evidence from developers and real estate agents, it was difficult quantify exactly how many unoccupied apartments existed, he said. ‘But we do believe there is a fairly large component — especially new apartment properties — that are simply unoccupied,’ Mr Christopher said.”

From Bloomberg. “Of all the mining-town booms spawned by China’s insatiable appetite for minerals, few were as epic as that of Australia’s Port Hedland. In one of the most remote corners of the Earth, its real estate was more expensive than in Manhattan, service workers earned bankers’ salaries, and its small airport began running direct flights to Bali, where miners bought beach houses to relax between stints in the red-stained Pilbara hills.”

“Property prices have fallen about 70% from their peak, the marina was downsized and delayed, and Port Hedland’s resident population of about 15,000 people is some 6% smallerthan in 2013.”

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This Post Has 24 Comments

  1. ‘But lately it’s pretty levelled out and possibly even — what would you say, stagnant? Lowered? Yes, definitely lowered, that’s for sure’

    Come on spit it out Larissa. Don’t be so greedy, you’ve been there for 20 years, dump the shack.

    Unless you refinanced.

  2. ‘In one of the most remote corners of the Earth, its real estate was more expensive than in Manhattan, service workers earned bankers’ salaries, and its small airport began running direct flights to Bali, where miners bought beach houses to relax between stints in the red-stained Pilbara hills’

    Boy, you can’t write a doomsday pitch any better.

    ‘Property prices have fallen about 70% from their peak’

    DONG!

  3. Gold bars get wear and tear?

    ####

    ““It’s like buying a gold bar,’ he said. ‘They’ll buy and hold and keep it shut for the whole duration of their ownership.’ Mr Christopher said some investors preferred to leave their properties empty to avoid ‘wear and tear’ and make it easier to sell them quickly when the market turned.”

  4. Not going to give it away!

    ######

    “Homeowners are holding off selling their properties,

    1. There wasn’t much competition, the price seemed OK, there were just really no buyers.’
      – Just getting started @ stage 1, I guess. Of course, it could be “different this time”.
      http://www.legacy.com/news/advice-and-support/article/the-five-stages-of-grief
      1. Denial – Ms Sawyer, you might want to read this…
      This is a refusal to believe that the loss is real. “This isn’t happening;” “This can’t be true;” “It’s a mistake” — those are all things a person might think or say upon hearing of a shocking loss. This is one way our brains try to absorb and process incredibly difficult news. Think of it as a defense mechanism to help cope.
      2. Anger
      3. Bargaining
      4. Depression
      5. Acceptance

      Housing used to be shelter pre-financialization. Now everyone’s a speculator. Even Sir Issac Newton got burned on the South Sea Bubble. Happens to the best of them.

      First principles:

      “An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” – Benjamin Graham

      “The individual investor should act consistently as an investor and not as a speculator.” – Benjamin Graham

  5. Because 20 years of appreciation isn’t enough and you need to get every last dollar from a FB?

    OR is it home equitied to the hilt?

    ####

    “In Sydney, retirees Tom and Larissa Bergmann have shelved their decision to downsize, due to the sluggish market. They have lived in their house on a quiet street near Botany Bay for more than 20 years.”

    1. Makes you wonder whether they over-leveraged the property for spending money over the past few years on the way up. Or the home they want to move to is still out of their reach until the bubble deflates a bit more. Hard to say.

  7. ‘There wasn’t much competition, the price seemed OK, there were just really no buyers.’

    Then clearly the price wasn’t okay, Dana.

  8. ‘Even if it was staring them in the face that they should buy the home, they weren’t pulling the trigger,’ he said.

    Maybe financial survival instinct is clicking in among your marks, er, clients, Adam. Or maybe they’ve read the writing on the wall and decided Suzanne’s research is unconvincing.

  9. ‘A lot of vendors are worried that their home won’t sell, because the buyers aren’t making buying decisions,’ he said.”

    Come now, Adam. We’re all adults. Let’s name that 800-lb gorilla in the room, shall we? What “vendors” aka greedheads are really afraid of is discovering the gulf between their wish price and what a creditworthy buyer is willing to pay, aka “market value.” When the price is right, the buying decision will come easily. But I guess you need many more nights of ramen noodles before you see the light.

  10. Has Oz been crashing pretty much forever, already? Seems endless…with the MSM in steadfast denial.

  13. The one good thing is if these people sell cheaper than maybe they can downsize to some shack that’s cheaper also.

    1. I’m sure these greedheads want to sell their place at the highest bubble price possible but want to lowball for their downsized shack! Don’t give away the house LOL

  14. ‘According to data from Thinknum, USA Today reports that the average price of a used Aston Martin dropped 54 percent to $103,000 from its peak average price in 2018.’

    ‘The average cost of a used Lamborghini has also reportedly dropped 56 percent to $207,000 and the average list price of a used Rolls-Royce declined to $198,000 — down 48 percent.’

    https://www.esquireme.com/content/35364-its-now-cheaper-to-buy-an-aston-martin-rolls-royce-and-lamborghini

    1. In related news, realtors are now selling their cars due to the “shift” in the housing bubble I mean market.

  15. Wall Street is on a tear to the upside. Sadly, this is the sign of a sick market driven by punch-drunk bulls, which can easily morph into a stampede in the opposite direction, or even over the edge of a cliff.

  17. I don’t get why people cheer for higher prices. More taxes and insurance to pay on these fake prices.

    Wake me up when people don’t want to put more than 25% of their income toward housing.

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