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If You’re Wanting A Higher Price In This Market You’ll Be Sitting Here In June

A report from the Australian Financial Review. “After a relentless run of strong price growth across Sydney’s property market, prices have fallen 11.4 per cent from the mid-2017 peak according to the latest Domain House Price report. There has been no holiday for painters and decorators who have spent January sprucing up homes as owners need to exert far more effort to make their place stand out in a market where unsold places are lingering.”

“Sydney-based painter and builder Nick Robins said it’s important not to discount the little things now that buyers have more leverage in the market. ‘If there’s something that doesn’t quite work when prospective buyers walk through the house they now are in a better bargaining position to negotiate the price down. So it’s better to spend the money to fix the tap or plaster over cracks,’ Mr Robins said.”

“Painter Sasha Nadezhkin noticed the uptick in work when property prices dropped in 2017 and continued to cool in 2018. ‘Before they could sell without painting or styling their homes but now it’s very hard to sell a place without getting a paint job, at the very least,’ he said.”

“The number of homes on the market has risen 19 per cent in Sydney and 31 per cent in Melbourne the analysis shows. Auctioneer Damien Cooley has noticed the market slow down. ‘Ordinarily we would see a higher volume of auctions scheduled for the next few weeks, but I don’t think we’re going to see that. A lot of people will be holding on to their property, no one’s panic selling,’ Mr Cooley said. ‘But it certainly is a buyer’s market.'”

“‘The difference for getting a buyer over the line in this market is presentation. That will make the difference. Of course another big thing here is being overpriced, if you’re wanting a higher price in this market you’ll be sitting here in June,’ Mr Cooley said.”

From Domain News. “Melbourne house prices have plunged 8.4 per cent in the past year, new figures show, shaving $76,000 off the median house price. ‘The ongoing falls have resulted in the steepest annual house price drop since our records began in 1993,’ Domain senior research analyst Nicola Powell said.”

“Domain data showed parts of Melbourne had already recorded double-digit annual drops with house prices in the inner-east, inner-south and inner regions of Melbourne diving 16.2 per cent, 15.6 per cent and 15.3 per cent respectively.”

“While buyers have gained an upper hand, property observers say the strict lending environment is causing sales to fall over at the 11th hour. Compton Green,  a real estate agency in the city’s inner west, have now extended their sale campaigns to give prospective buyers more time to secure finance.”

“‘Late last year, we had many clients on the day before auction say they hadn’t gotten their approval and they couldn’t bid on the day,’ said director Adrian Butera. ‘So now we’re talking about five or six-week campaigns.'”

“Weak off-the-plan sales could halt the construction of new developments, said Angie Zigomanis of BIS Oxford Economics, adding that prospective buyers will soon be able to choose from a large supply of apartments due to be completed and come onto the market. ‘If you buy off the plan, there’s a chance prices might fall further once it’s completed,’ he said.”

From News.com.au. “Perth has emerged as Australia’s most affordable capital city for everyday families, with house prices in the Western Australian capital now at the most affordable level in more than two decades, according to the Housing Industry Association’s (HIA) quarterly housing affordability report.”

“Realestate.com.au chief economist Nerida Conisbee told news.com.au the news was good for first home buyers — although those who bought at the peak of the market were ‘doing it tough.'”

“‘Perth is in the midst of an almost five-year property downturn and the market has seen big declines in prices, and although it’s tough for people who already own property or who bought when the market was right at its peak, for people looking to buy, it’s made the city far more affordable, which is not necessarily a bad thing,’ she said.”

“Ms Conisbee said the Perth market has started to recover in 2017 before the banking royal commission was announced, causing banks to tighten lending criteria and making it harder for people to buy property. ‘In 2017 there was much more buyer activity and we started to see a bit of recovery in the market,’ she said. ‘But then the banking royal commission was announced in December 2017, and Perth started to take another dive.'”

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This Post Has 58 Comments

  1. ‘In 2017 there was much more buyer activity and we started to see a bit of recovery in the market,’ she said. ‘But then the banking royal commission was announced in December 2017, and Perth started to take another dive.’

    So two peaks for the buyers. Ouch!

  4. ‘A lot of people will be holding on to their property, no one’s panic selling,’

    Nobody’s gonna try to stop you from HODLing until the sooner of death or bankruptcy.

    1. “‘The difference for getting a buyer over the line in this market is presentation. That will make the difference. Of course another big thing here is being overpriced, if you’re wanting a higher price in this market you’ll be sitting here in June,’ Mr Cooley said.”

      I think he meant June 2023

  5. “What an Investment Fund, Forced to Take a Big Loss, Said about the Housing Bust in Prime Central London”

    (snip)

    “London Central Portfolio Property Fund, a closed-end fund focused on small apartments worth less than £1 million in Prime Central London, sent a letter to its investors on January 21 in which it disclosed that it had to write down the value of its properties by 9.6% over the six-month period ending September 30, 2018.”

    Damn, I hate it when that happens.

    “Due to leverage in the fund, the net asset value of the fund dropped by nearly 20% over the six months.”

    Ooooooops.

    “This pulled down its net asset value by nearly 25% over the two-year period.”

    Bummer!

    “The write-down came about because Al Rayan Bank, which provides financing for the fund, exercised its right to revalue the fund’s portfolio properties, according to a filing with The International Stock Exchange, where the shares trade as London Central Apartments III. The bank instructed Mortlakes Chartered Surveyors to conduct the valuation.”

    See? Bankers rule.

      1. (another snip)

        “Most investors are aware of the unprecedented difficulties faced by Prime Central London residential over recent years and recognize the remarkably difficult trading conditions that the Fund has had to endure.”

        “The letter mentions the collapse in share prices over the past four years of two real estate agencies: Foxtons down 87.4%; and Countrywide, the largest agency in the UK with over 10,000 employees down by 98.5%.”

        Mere flesh wounds.

        https://youtu.be/zKhEw7nD9C4

        1. FWIW, the article itself makes for a very good read and the associated comments also make for a very good read.

        2. “…and Countrywide, the largest agency in the UK with over 10,000 employees down by 98.5%.”

          Such a familiar name… where have I heard it before?

    2. If you go to rightmove.co.uk you’ll be hard pressed to find properties in London that say “reduced”, “new price”, etc. The Brits take that property stuff even more seriously than we do. “Rentier” culture indeed. Hat tip to Max Keiser.

  7. “Perth has emerged as Australia’s most affordable capital city for everyday families”

    as opposed to what? Weekend families? Every other day families? Leap year families?

        1. My point was not price per square foot, but rather there were only 7 homes in the sample. By the way, price per square foot may not be a perfect measure, it is certainly highly relevant. I would guess it correlates better than land. A 3000 square foot house with a 10,000 square foot lot will not lose much value on a 8,000 square foot lot. Whereas there is a significant difference between a 3,000 square foot house and a 2400 square foot house, all other things being equal. (of course, both are 20% changes)

          2. price per square foot

            Meaningless unless you have the complete specs and a separate lot value. This statistic wasn’t even used by housing shucksters until the bubble years. It is not for those who are thinking logically.

          3. If price per square foot is “meaningless” unless you have “full specs” the median price is well. Indeed, you could argue it is less meaningful because it makes no adjustment for lot size, home size or neighborhood. You have no idea of the make up of those who choose to list. If it happens more people who have cheaper houses decide to list, your data is skewed. By the way, you could say home size is a proxy for quality homes, as you don’t see a lot of 3,000 square foot homes in cheap neighborhood. Finally, there is just a lot of normal variation, so that hand picking small neighborhoods where the median happens to go down is literally meaningless. I don’t doubt the market is slowing down, but these large drops in listing in small areas is not representative of the market.

          4. home size is a proxy for quality homes

            Unlikely in this era. More likely home size is a proxy for speculative idiots.

  9. I ran across this on the Net…

    “Truth never dies, but it lives a wretched existence, “ Jewish Proverb,

    “And it is often painfully underfunded.” Anonymous Heins

    1. “Truth never dies, but it lives a wretched existence, “ Jewish Proverb

      Here is a tenured Jewish professor of Evolutionary Biology who was hounded out of his job, accused of fomenting racism. Listen carefully to his lecture. He speaks very well, incredible articulate.

      “Bret Weinstein, How the Magic Trick is Done”
      https://www.youtube.com/watch?v=bz0oxIZ3xIg

      1. “Listen carefully to his lecture. He speaks very well, incredible articulate.”

        You are absolutely correct.

  10. Interesting listing from once gritty yet reportedly now “hot” Chelsea, MA. The description states that at $499,000: “Seller is firm, so no tire kickers and window shoppers wanted. Private showings only.” Yet, there was an open house this past weekend.

    And, the price history (if accurate) shows that this condo has been listed repeatedly since 2011 – starting at $249, 999 – has not sold and the price has doubled in 8 years:

    https://www.zillow.com/homes/for_sale/condo,apartment_duplex,townhouse_type/63439462_zpid/225000-599000_price/907-2414_mp/1_open/-elevator_att/globalrelevanceex_sort/42.997616,-70.419617,41.91965,-72.202149_rect/8_zm/0_mmm/

    1. I used to live in Chelsea. That location has just had a transit station added and that may add to the desireability. However, Chelsea is still a dump. Great place to get robbed, pick up a street hooker, or score some drugs.

      1. I live a few miles away from Chelsea currently. Must admit I have not spent a lot of time there, usually just a drive by over the Tobin Bridge if I’m going north. Will be watching this listing to see if the seller remains “firm” at the current price or removes the listing yet again.

  11. I get extend-and-pretend, Fed puts, QE2-Infinity-and-Beyond, the timeless Chinese economic growth miracle, etc. Chalk them all up to central bankers pulling one lever after another in order to milk extended growth out of the economy’s udders*.

    What I don’t get are the points when such measures stop working. Why do we need to ever undergo economic meltdowns such ss the Tech Stock collapse (2000-2002), the Great Mortgage Mayhem (2007-2009) or the Everything Bubble Burst (TBD)? It just seems so wrong that all happy economic episodes come to an unhappy ending.

    * Try to avoid becoming an udder if you can.

    1. The Financial Times
      Opinion
      Technology sector
      Another tech bubble could be about to burst
      We are in the late stages of a credit cycle, with too much money chasing too little value
      Rana Foroohar yesterday

      There were many disconnects between last week’s World Economic Forum and the real world. One of the most notable was the techno-optimism displayed by many participants, which was in sharp contrast to what the markets themselves are expecting from the technology sector this year.

      The coming spate of initial public offerings in particular looks shaky. Uber’s chief executive Dara Khosrowshahi was all over Davos, talking up the company’s forthcoming initial public offering. But the talk had a whiff of desperation. Uber, along with Lyft and a host of other large, still-private tech companies such as Slack and Airbnb, are likely to try to go public sooner rather than later — not only because of worries about a coming recession and volatile markets, but because they have grown so fat on private funding, it is unclear whether the market will be able to sustain their valuations. (Uber’s, for example, is pegged at $100bn.) They want to get their money while the getting is good.

      It is a situation that is both similar, and not, to the dotcom boom and bust that occurred at the turn of the century. Back then, I was working in venture capital in London. Companies like the now-defunct, LVMH-backed online retailer boo.com — the pets.com of Europe — were spending millions on glossy ads, and would-be entrepreneurs were trolling for easy money at First Tuesday networking events. Remember those little red-for-investor or green-for-talent lapel dots everyone had to wear?

      Then, as now, we were at the late stages of a credit cycle, with too much money chasing too little value. And then, like now, investors were counting on a spate of hot IPOs to pour a little more kerosene on markets that were clearly over-inflated. We all know how that ended, on both sides of the Atlantic.
      …

      1. “Then, as now, we were at the late stages of a credit cycle, with too much money chasing too little value.”

        Time for the plebs to swallow another blue pill.

    2. The Financial Times
      Opinion Global Economy
      Will we see a rerun of a market meltdown, just like in 2016?
      Many observers believe global recession risks are high this year
      Gavyn Davies
      Jay Powell, Fed chairman, has compared the current economic situation to that in early 2016
      © Bloomberg
      Gavyn Davies yesterday

      The sharp recovery in risk assets in January has followed significant policy changes by the US Federal Reserve, the Trump administration and the Chinese authorities. These actions have reduced the markets’ perception of recession risks, even as economic data have continued to weaken.

      No lesser figure than the chairman of the Federal Reserve, Jay Powell, himself has compared the current situation to that in early 2016, when a pause in US monetary tightening, and a Chinese stimulus, unleashed a major extension of the equity bull market.

      Global equities rose by almost 50 per cent in 2016 and 2017 combined. Could anything comparable happen again?

      No one knows whether this year will be like 2016. But we will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy should that be appropriate to keep the expansion on track
      Fed Chairman Powell, 4 January 2019

      There are certainly similarities between today’s global economic situation and that in early 2016. Then, markets were in meltdown because activity data in the US and China were both weakening markedly, deflation risks were intensifying, and the policy response from the Fed and the Chinese authorities was delayed and apparently inadequate. Some important economic forecasters were predicting a world recession within 12 months.

      The latest activity data from the US have not yet reached the low points seen in 2016, but China has returned to the lows. Nowcasts for both economies are still falling (see below) and the Eurozone is also plumbing new depths. At Davos last week, the IMF downgraded projections for global growth and warned quite loudly about contractionary forces taking hold.

      Deflation concerns are, admittedly, less threatening than in 2016. US inflation expectations have fallen less than they did then. Even in economies where interest rates are stuck near zero, including the eurozone and Japan, the tail risk of deflation has not shown any ominous rise, according to the inflation swaps markets. Furthermore, China seems much less likely to impart a deflationary shock to world goods prices by suddenly devaluing its exchange rate.

      Still, the overall picture for economic growth seems broadly similar to three years ago. Many astute observers, including Lawrence Summers, believe that global recession risks are high, because aggregate demand will ebb away as the forces of secular stagnation reassert themselves.

      As in 2016, the outcome is likely to be determined by the response of macroeconomic policy in the US and China, including trade policy, to the weakening in the global economy. To what extent will policy be able to offset the contractionary forces that have taken hold in recent months?
      …

    3. “It’s the rig count!” (Channeling AbqDan…)

      Business
      Oil prices fall on rising U.S. rig count, economic slowdown
      By Reuters• 28/01/2019 – 03:04
      By Henning Gloystein

      SINGAPORE (Reuters) – Oil prices fell on Monday after U.S. energy firms added rigs for the first time this year in a sign that crude production there will rise further.

      U.S. spot crude oil futures were at $53.37 per barrel at 0027 GMT, down 32 cents, or 0.6 percent, from their last settlement.

      International Brent crude oil futures were at $61.37 a barrel, down 27 cents, or 0.4 percent.

      Analysts said high U.S. crude oil production, which hit a record 11.9 million barrels per day (bpd) late last year, was weighing on oil markets. [C-OUT-T-EIA]

      In a sign that output could rise further, U.S. energy firms last week raised the number of rigs looking for new oil for the first time in 2019, adding 10 facilities, to 862, Baker Hughes energy services firm said in its weekly report on Friday.
      …

      1. They$ gonna need a little more Rig$ on account$ of these di$coverie$ Professor:

        $audi Arabia’s ma$$ive oil reserves total 268.5 billion barrel$, even bigger than previously known
        Saudi Arabia’s oil reserves are 2.2 billion barrels larger than previously reported, an independent audit finds.
        The audit confirms that the kingdom’$ re$erves are above 260 billion barrels, a figure that has long faced skepticism.
        The audit shows why “Saudi Aramco is the world’s most valuable company and indeed the world’s most important,” says Saudi Energy Minister Khalid al-Falih.
        Tom DiChristopher |Published Wed, 9 Jan 20

        +

        BP just di$covered a billion barrel$ of oil in the Gulf of Mexico

        BP discovers 1 billion barrels of oil at its Thunder Horse field in the Gulf of Mexico.
        The oil giant also says it will spend $1.3 billion to develop a third phase of its Atlantis offshore field $outh of New Orlean$.
        BP credits its investment in advanced $eismic technology for speeding up its ability to confirm the di$coveries.
        Tom DiChristopher | Published Tue, 8 Jan 2019

      2. I’d like to see more pipelines built. much safer and more efficient than trains and trucks to transport nat gas and oil.

    4. The Wall Street Journal
      Heard on the Street
      Why the Odds of a Recession Are Rising
      Indicators show growing risk of recession in year ahead, after government shutdown likely sapped economy’s strength
      By Justin Lahart
      Updated Jan. 25, 2019 3:24 p.m. ET

      Even in the best of times, investors can’t dismiss entirely the risk that the U.S. will slide into a recession within the next year. These aren’t the best of times.

      The government shutdown that got put on hold Friday strained the finances of federal workers and contractors, and the cumulative effects of the U.S. trade fight continues to weigh, while slowing growth abroad—particularly in China—compounds those woes.

      All…
      To Read the Full Story
      Subscribe

    5. What’s a “perceived riskier asset”? I thought plunge protection served to make all assets risk free, especially those favored by the investor class?

      Nvidia’s stock plunges 14% on fourth-quarter profit warning

      Home
      Markets
      U.S. & Canada
      Market Snapshot
      U.S. stock futures fall in a week packed with earnings and a Fed update
      By Chris Matthews and Barbara Kollmeyer
      Published: Jan 28, 2019 8:24 a.m. ET
      Caterpillar poised to headline week’s earnings onslaught; oil prices slump as perceived riskier assets pull back
      …

      1. Nvidia rode the crypto craze up and is now riding it back down. The company was doing well before the whole bitcoin mining industry but was inflated by all the speculation. Now that people have come aware of reality, Nvidia will go back to its pre crypto value and hopefully survive through it.

    6. ” It just seems so wrong that all happy economic epi$odes come to an unhappy ending. ”

      The “Golden.Gate.Bridge” … began as a rough hewn flat board on a foot path across a muddy creek, … long time$ ago.

  12. ‘The ongoing falls have resulted in the steepest annual house price drop since our records began in 1993,’ Domain senior research analyst Nicola Powell said.”

    You ain’t seen nuthin’ yet, FBs.

    1. It’s great that somebody figured out a use for one of those white elephant luxury apartments.

  14. Oh noooooo The digital drug: Internet addiction spawns U.S. treatment programs
    When Danny Reagan was 13, he began exhibiting signs of what doctors usually associate with drug addiction. He became agitated, secretive and withdrew from friends. He had quit baseball and Boy Scouts, and he stopped doing homework and showering.

    http://news.trust.org/item/20190127105154-wfuzc

  15. Here’s a MarketWatch headline: “Caterpillar blamed for a quarter of Dow’s 350-point decline after profit badly misses consensus estimate”

    Does a “consensus estimate” imply collusion?

    1. Iffin’ Wall $treet is crawlin’$ a “wall.of.worrie$” … the yellow caterpillar $eems to bee headed in the wrong direction$!

  16. I haven’t heard a good argument against Warren’s 2% tax on the $50 mill + crowd. we need to pay off the debt or at least stop the deficit spending, this should be discussed. Wars are not free and the USA infrastructure suffers from deferred maintenance. Any better ideas? The GOP has held the purse sting 8 out of the last 10 yrs and look at that debt!

    1. I would be on board with that. But I think the tax evasion would prevent the meaningful collection of the revenue. And there is the problem of the step cutoff (e.g. I suspect a lot of wealthy people will all of the sudden make $49 million). Better to tax land and housing because they can’t move or flee to tax havens.

    2. Warren’s 2% tax on the $50 mill + crowd.

      $50 million is rather arbitrary. The path leads to everyone having $1 more than you. Besides, isn’t skimming 2% what the Fed is designed to do?

    3. “Wars are not free and the USA infrastructure suffers from deferred maintenance. Any better ideas?”

      The current cost of keeping Iran “boxed-in” from Afghanistan and Iraq is now $1-trillion/year, and it was higher during combat operations. Loosely, the cost of the middle-east resembles our national debt.

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