Some positivity in the mix today, with the AFR citing CoreLogic and Westpac figures over the weekend showing that the decline in property prices is slowing, and musing that while undoubtedly things were still grim, the worst could be behind us.
The obligatory caution today comes courtesy of the RBA, which has warned in its six-monthly financial stability review that if things get any worse, property owners risk falling into “negative equity.” It reckons the combination of credit crunch and a “looming glut” of new apartments about to hit the market has “the potential to exacerbate housing price declines.” The biggest risk is in Sydney markets.
Doing their bit to limit the so-called glut were inner Sydney and Melbourne sellers-at-auction over the weekend, who were apparently cutting sales prices by up to 20 per cent to shift their homes. It certainly kept the clearance rates up; Sydney posted 63 per cent, Melbourne 55 per cent and Brisbane 49 per cent.
REA reckons this price drop is allowing first home buyers to crack bargains in premium areas – although that’s definitely one to take with a boulder of salt. If you believe FHBs are flocking to suburbs with $1.5M median prices, you’ll believe anything.
Speaking of first-timers, we’ve been seeing a bit of commentary around helping kids help themselves into the property market. The focus appears to be on savings plans provided by www.moneysmart.gov.au as well as the First Home Super Saver Scheme (FHSSS). This is timely given the rising number of FHBs floating around OTP displays and display homes at the moment.
Listening to all this talk of falling prices, it’d be easy to think the world has ground to a halt. Not so; infrastructure construction spending is filling the gap left by decline in new apartment starts, especially in Sydney. The RBA still hasn’t got its collective heads around why our economy could be struggling on paper yet job numbers are so high, which doesn’t inspire a lot of confidence.
…and in the midst of all this, the federal election campaign gave us all a lot to chew on over the weekend. Two things to pick out here: the competing tax policies continue to pit Robin Hood against Australia’s community of economists, and Deloitte Access Economics’ warning today that if property prices continue to fall, the budget will need to be rethought anyway.
To quote the Turks, this too shall pass. Sydney’s Belle Property and Melbourne’s hockingstuart seem to believe so; they’ve merged in “the biggest known consolidation of (real estate) agencies in Australia.” No redundancies, and some pretty impressive economies of scale; a very tidy way of using the low point in the cycle to prepare for the future.