Treasury warning on home price 'bubble.

[connaust]

 

Treasury warning on home price 'bubble

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A SENIOR Treasury official has sounded the alarm over Australia's property market.

 

He has warned that the prospect of a sudden and dramatic drop in prices is "the elephant in the room" and should not be ignored by the federal government.

 

While the government and Reserve Bank insist Australia does not have a housing bubble - as some economists and the International Monetary Fund suggest - it remains such a worrying concept that Treasury has privately sought reassurance from its analysts that prices are not artificially high and that Australia does not face the kind of house price collapse that has hit Britain and the US.

 

Documents obtained by The Weekend Australian under Freedom of Information laws show the Treasury officials preparing the so-called Red Book of briefs for the incoming government were as divided as private sector economists about the strength of the property market.

Definitely something going on in Melbourne..... according to SQM Research there are about 35K houses, units and apartments for sale in Melbourne..... e.g. Bayside alone 2,500....

[Parley]

I'm not sure it will happen but if it did, it could be a good thing for many people.

It would give an opportunity for people to buy a home who can't afford it now.

Maybe an opportunity for people to buy an investment who already own their own home.

Hopefully our council rates would go down too.

 

I don't see it happening to any great degree though. Our economy is reasonably strong and migration will ensure a continued demand for housing.

[connaust]

Spoke with a large private college owner last week, politicians have shown no understanding of the income from international students and families (who rent and buy, travel etc.) while playing tough to a domestic audience.

 

Most people have under estimated the impact of the significant decrease in student numbers now happening in Melbourne (and those on bridging visas) from India and now China..... with full effects to rattle through till 2012.....

 

Yes, great news for prospective buyers and renters in 2011, 2012 etc., problematic for highly leveraged investors and SMSFs, and higher fees for domestic students......

[sykestykes]

This is really interesting Andrew. Thank you for posting.

[connaust]

And further.... in Melbourne now there are so many cafes, restaurants looking for personnel whether in Chapel St, Toorak Rd, Lygon St., Nelson Pl. Williamsown etc. (some people notice decline in service e.g. my preferred cafe in Williamstown, as now just local kids "working" while entertaining their friends....), and a taxi operator said on ABC radio that one should expect long delays for taxis in the festive season because he can only operate 40/80 taxis as Indian students have returned home....

[connaust]

Property prices will fall as unsold stock levels soar, experts warn.

 

Property experts are warning prices will continue to fall into 2011 as the market becomes flooded with unsold properties, as buyers remain hesitant due to higher interest rates.

 

The warning comes as the market recorded another lacklustre performance over the weekend, with clearance rates still in the 50s in Melbourne and Sydney. But SQM Research founder Louis Christophe says that figure could actually be much lower due to what he say is a flawed method of reporting.

 

These experts say the lack of demand in the property sector is leaving agents with thousands of unsold properties heading into the traditionally quiet Christmas holiday period. Real Estate Institute of Australia president David Airey says this will only continue to put downward pressure on prices.

 

"Western Australia is leading the way with what we'd call a significant oversupply, brought about by sales being well under their long-term averages," he says. "And in Melbourne, you have week after week with auctions over 1,000 listings."

 

"So effectively you have low levels of sales due to buyers backing away, and people continuing to put properties on the market because they are panicking a little bit. They think they need to sell them quickly, but in reality they don't."

 

Airey says real estate agents are too willing to accept any listing they are offered, and warns they need to be more discerning.

 

 

Hopefully a gradual cooling or deflation will allow some sanity back into property market...

[Guest daveintaiwan]

I'm based in Perth and this is taken from an article written in mid October...

 

Median house price down to $480,000, according to REIWA.

 

Two-thirds of Perth's house sellers are prepared to drop the asking price to get a sale, as the average paid for a property in the city has slumped.

 

Data released by the Real Estate Institute of WA shows the median price in the three months to September was $480,000, down $20,000 on the June quarter.

 

The 4 per cent fall comes as the number of sales fell 25 per cent on the long-term average, and despite 67 per cent of vendors being prepared to discount their properties by an average 6 per cent.

 

In the June quarter, 60 per cent of vendors were prepared to cut the asking price. The average number of days to sell a property was 63 days, down three days on June.

 

There were now 16,000 properties for sale in the metropolitan area, the highest level since December 2008, REIWA president Alan Bourke said.

 

Melville (up 26 per cent), Stirling East (21 per cent), Swan (19 per cent), Bayswater-Bassendean and north-east Wanneroo (up 17 per cent) led the way in an increase of properties for sale.

 

Mr Bourke said here had been an increase in sales in the $300,000 to $400,000 range - with increased turnover in Canning, Gosnells, Kwinana, and Rockingham - and in those areas the average discounting figure had been lower.

 

However, 84 per cent of western suburbs sellers were prepared to drop their asking price an average 8.2 per cent. The highest average discount was 8.8 per cent in Fremantle.

 

Seems prices have already been falling here even though we have the mining boom on our doorstep. The Treasury should be concerned.