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A Boom That Never Was

A report from News.com.au in Australia. “Deloitte Access Economics’ latest Business Outlook noted average dwelling prices in Sydney had risen by about $3000 per week in September. Melbourne experienced a bounce of about $2500 a week. Deloitte noted that ‘Australia needs a renewed housing price bubble like it needs a hole in the head’ with the recent rebound ‘best understood as a hair of the dog that bit us in the first place.'”

From Independent Australia. “In the months since May’s Federal Election, all eyes have once again turned to the property market, as a combination of factors seemingly combined to create yet another price boom in the Sydney and Melbourne housing markets.”

“In a recent interview with Martin North of Digital Finance Analytics, REA Chief Economist Nerida Conisbee had a very different viewpoint. Based on the housing price data compiled by Realestate.com.au’s own records of properties sold and Hometrack, a subsidiary of REA. Conisbee stated that: ‘We’re not seeing growth in Melbourne and Sydney as yet … we are still seeing price declines.'”

“The question of whether the REA price index or the CoreLogic daily index is actually closer to the mark is a matter for economists and statisticians to debate. But the competing viewpoint put forward by Conisbee and the REA does raise some rather pertinent questions. The Australian people and even the Prime Minister himself have been making determinations and even life decisions, about the health and direction of the property market based on a single data source.”

“CoreLogic may be correct and prices may be booming just like their index indicates, but if the REA data is correct and prices are not actually rising, some Australians may have been making one of the most important choices of their life on a boom that never was.”

From Business Insider. “Buying off the plan could cost you tens of thousands before you even move in. According to APRA, ‘Loans in negative equity, where loan value is greater than the encumbered asset value are increasing.’ If your bank values your property as less than the purchase price, you may still owe the developer the purchase price, which could cost you tens of thousands more than you planned for due to shortfall.”

“Furthermore, according to the RBA, apartments accounted for roughly one-third of all new dwellings approved for construction in Australia from 2014 – 2018. With such an oversupply of apartments in a suffering market, it’s interesting that negative equity has been going largely unnoticed.”

“With the peak of apartment completions occurring in 2018, data from the RBA and ABS below show several of Australia’s capital cities still have a large number of apartments scheduled for completion in 2019 and 2020. This could lead to a potential oversupply and reduction in high density apartment values.”

From Domain News. “Renters are enjoying some of the best conditions in years, reaping the benefits of Sydney’s recent property investment boom, new data shows. The cost of renting a house or a unit is lower than what it was five years ago in 55 suburbs, data from the Domain Rental Report for the September quarter shows. Prices have dropped by up to one-quarter over the past year.”

“‘It’s the strongest annual decline in about 15 years’ said Domain research analyst Eliza Owen, noting the 2013-2017 investment boom had put downward pressure on prices.”

The Property Observer. “The Bond mansion, the Perth home built by the late businessman Alan Bond, is back for sale after a heavy price reduction. Noted as one of the best homes in Perth, the sprawling home on the Swan River initially sought $50 million when first listed over Christmas 2017.”

“Ray White Dalkeith agent Jody Fewster is now marketing the property with a guide of $35 million plus. Fewster, whose father was Alan Bond, grew up in the home. It’s likely the vast home will go back in price, having been bought for $39 million in 2011 by Sue Gibson.”

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This Post Has 36 Comments

  1. ‘CoreLogic may be correct and prices may be booming just like their index indicates, but if the REA data is correct and prices are not actually rising, some Australians may have been making one of the most important choices of their life on a boom that never was’

    Corelogic are lying dogs.

    https://www.propertyobserver.com.au/finding/location/qld/104762-mount-isa-queensland-mortgagee-home-asking-price-reduced-25-and-sold.html

    https://www.propertyobserver.com.au/forward-planning/investment-strategy/market-trends/105139-neutral-bay-apartment-median-down-100k-since-2018-peak.html

    https://www.propertyobserver.com.au/forward-planning/investment-strategy/market-trends/105145-manly-median-apartment-price-down-100-000-in-nine-months.html

    2. I cant seem to find it but wasn’t there something you posted awhile back relating to the NAR and Corelogic falsifying / covering up realtor commissions and a lawsuit? What wver became of that lawsuit?

  2. ‘best understood as a hair of the dog that bit us in the first place.’

    The Housing Bubble won’t end until all hope of a price rebound is resoundingly crushed beyond the point of reasonable doubt. Think Japanese property market in the 1990s.

  4. Driving through California from north to south hitting some of the national parks right now. Started in Portland, will end in Vegas. The number of places that seemed ok/nice 5-15 years ago and are now infested with drugged out zombies covered in tattoos is sad. Freeway construction about every 10-20 miles. The price of everything except some fruits and vegetables jumps immediately upon crossing over from Oregon.

    New housing being built as well as office buildings. Can’t for the life of me understand building houses right next to a freeway. Every town has the same strip malls with the same lame stores. Nothing of character to be found.

      1. Note the location of the property by examining the map. Pay attention to the proximity of the 94 freeway and the 125 freeway interchange. This a major plus.

        The benefit of proximity to the 94 and 125 freeway interchange becomes obvious when one opens his windows to enjoy the surf-like audio experiences generated by the endless traffic of an endless number of automobiles punctuated by an ample supply of Big Rigs. All of this, of course, without the damaging effects of the salt air on your property.

          1. “You moon lighting as a realtor mr banker? You gots them realtor headlines down!”

            I leave the realtor business to other people, such as Suzanne. She spends her time and money lubing up the marks and then she sends them to me for the final screwing.

            She works, I reap. As for having the realtor headlines down, I simply stand aside and marvel at what sort of advertising spin it is that works, and in this totally dumbed-down society we live in just about any type of advertising spin works.

        3. Probably a joke listing. It looks like this listing/host has 0 reviews and the calendar is completely blocked off.

      2. “Freeway noise sounds like ocean waves.”

        While being shown a rental house, I was told to regard the narrow path of pebbles separating the place from the one next door as a zen garden.

    1. “When I visited her home I could see why the lender she had worked with had not liked the property, but I could also see that many of the issues were cosmetic and easily remedied at minimal cost. I gave her a punch list of items that needed to be done.
      “She followed my instructions very diligently, the work was completed, the property passed underwriting standards and the loan closed approximately three months after my first conversation with her.’

      For which he got to collect a hefty fee. It is all good.

  7. Oh bugger!

    The Financial Times
    Goldman Sachs Group
    Goldman Sachs’ third-quarter earnings miss expectations
    Trading the only bright spot in the bank’s four core divisions
    an hour ago

    1. The IMF considers anything under 3 percent growth a recession. Do you think if we move from 3 percent growth to 2.9 percent growth the US is really going to notice? Particularly when the article states that China will decline by more than .1 percent which means the rest of the world will decline by less than .1 percent.

    2. Interesting, that the IMF has the growth rate increasing next year for the world and the US only slowing to a 2.1 percent rate which is not only faster than the average 1.5 percent rate under Obama, do not be fooled by spin which takes away his first year, it is more than enough growth to keep unemployment steady to down this late in the economic cycle. The sure thing recession is fading. I bet when Paul Ryan put in the SALT caps he thought he would not only drive down housing prices but he would cause a recession which would cause Trump to lose a re-election. What he did not get but most on the board does get is that higher housing prices are bad for long term growth. Keynesian economics is like a diet filled with sugar, it creates short term energy but is very adverse in the longer term.

        1. True, but people can run on sugar for a long time, perhaps even their own lives.

          You can definitely live on sugar your whole life…however long that is :-).

          1. You can definitely live on sugar your whole life…however long that is :-).

            Kind of reminds me of people who say, “You can sleep when you’re dead.”

            My retort has always been, well, lack of sleep will bring that event on faster than it otherwise might have occurred!

    1. Yeah, lots of excuses…the toddlers like their kindergarten teacher, so mom and dad can’t think about selling until Spring, etc., or like Diana’s sidekick said, “challenges.”

    1. all the Democrats have left is grandstanding. No policy. No ideas.

      This part does.

      Well, they do have one idea — raising every worker’s taxes, not just those of “the rich”, but down to middle income levels, to fund a government takeover of health care in this country while doing absolutely nothing to control its rising costs.

      This latest effort to overturn the will of the voters, over some shit involving the Ukraine, has no impact on my life, and means nothing to me.

      2. some shit involving the Ukraine

        I find the circus quite ironic. The Dems are asking if a crime was committed by the President if/when/how he asked if a crime was committed. You can’t make this stuff up!

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