Crumbling House Prices in Aust and NZ??

are prices really falling in Syd / Melb? Perth is still rising strongly and is expected to continue for some time. I would be interested to see some factual data on the east coast declines.

John – 0419 198 856

Ausprop,

Some information/data on east coast property prices from APM

http://afr.com/articles/2004/05/26/1085461821861.html

James

Hi

Ok. We have seen property prices fall on the East Coast of Australia eg. Melbourne down by 13%.

But on the positive side –
1. The .5% interest rate increase had the effect the Reserve bank wanted by taking some heat out of the market.
2. Low wage earners received a pay rise a few weeks ago.
3. Tax cuts for most wage earners.
4. Exchange rate of 70 cts to $US. A rate thats probably ok.
5. We probably wont be effected too much if the US decides to increase interest rates.
6. Inflation within guidelines so no rate increase hopefully in the short term.

With tax cuts and wage rises to low income earners, this will have the effect of supporting home values. eg. more money to pay increased rents and more cash in pocket to pay home loans.

As ususal comments appreciated. I probably missed something too.

Here’s the transcript of the PM story. http://www.abc.net.au/pm/content/2004/s1116631.htm

I thought the most interesting thing about it was the wildly different result on Sydney prices between APM and Residex. That chimes with other reports I’ve been seeing, notably from Alan Kohler, that residential property statistics are very unreliable.

gmh54 (any relation to the Kingswood?) thanks for pointing out the rising influence of China and Europe on global money flows. I hope that will counterbalance the effect of US interest rate movements on Australia: US rates go up, Oz dollar drops, import prices rise, inflation rises, Oz interest rates rise. That’s a simple one; it can get much more exciting very quickly if you think about ongoing effects on the US economy. But the main point is that it will be good to have a few more balance points in the system.

Ghoti (ready to buy when the price is right)

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Without music, life would be a mistake.

Expectations and more specifcially future expectations are powerful influences on household and business actions.

So whilst tax cuts, global economic conditions will influence us, the expectation of future interest rate rises, have I believe an even greater effect on behaviour. If people think interest rates rises are inevitable, decisions to purchase/invest are either postponed or abandoned. A self-fulfilling prophecy. The reverse is true and played a key role in the property boom over the last few years.

IMO,the last 6 months is again evidence of that. Whilst we have had had a 50 basis point increase in rates, the effect of this rate increase and the expectation that we will have rises this year, has had a significant effect.

Business & household confidence surveys do give an insight into future behaviour. They are worth examining.

James

These stats are either not reliable or too late and is not reflection the current market.[baaa] Alan Kholer had written an article about all these stats. I could not find the link for this post. I think some suburbs are worse than these stats put out and I think market will continue to slide. Just wait till next time they put out the stats.

Breakfree