I refer to the ‘guff’ written in today’s Australian Financial Review about a building boost being credited to continuing low interest rates and Brisbane leading home price rises, not to forget a drastic cut in the number of days on market for properties in all capital city markets.
I made a few phone calls today, mostly out of sheer boredom, but it had to be done. Building approvals ‘spiked’ as various approving authorities finally pulled their collective fingers out and ‘rubber-stamped’ quite a few major developments. So the figures were skewed, yet again. Maybe there was some top-down political interference along the lines of ‘for goodness sake get some good news out there, we’re drowning here’ or maybe that’s just too fanciful to consider? Maybe…
Residential property is still way overpriced in this country with tens of thousands of younger people just giving up on the idea of ever owning (i.e. being tied to a massive mortgage repayment on a maybe depreciating asset for most of their lives) their own home, preferring to stay at home and pay board and lodging, rent or share with friends. Everyone is scared. Scared of paying too much. Scared of losing $150,000 on a $500,000 property over the next couple of years when the correction inevitably hits. scared of losing their job/s and having to forfeit their house, and hard earned massive deposit. AND, if these ‘economists’ (I like the MIST part – all foggy, hazy, sticky, hard to see through and dangerous to go too far in with) are correct, then these already expensive properties are going to sail further out of reach of first home buyers and those who need to upgrade as their family grows. Catch 22.
In the SAME article (who reads past the first few paragraphs anyway?) it goes on to say that the resource sector decline will wipe 2 percent a year from economic growth. How that will be a home price driver is beyond me…just adds to the uncertainty surrounding the mining sector and all industries that are fully and partially dependent upon it – maybe I’m over simplifying? It also quotes another economist as saying that businesses are generally still quite cautious… you don’t say! You do not have to be an economist to work that one out.
RPDATA says that ‘Days on market’ have dropped dramatically from 2012 to same period this year. That may well be the case BUT, its not that there’s more ‘eager’ buyers out there, its that Sellers are under more pressure to sell and have been forced to ‘meet the market’ much more quickly to secure a sale. Simple – lower your price to a realistic or bargain basement level and there WILL be a buyer there who sees the value (in their view) and will snatch it up. These basic figures are a nonsense, and misleading when published like this, giving ordinary folk the wrong idea about what’s going on in the market. Each one of these statistics should be more robustly examined and discarded as raw data. They make no real sense unless you can have a look at the circumstances surrounding each and every listing and sale that contributed to the stats. And with a fairly small sample size across a very, very wide range of property types and prices, there is always going to be room for cherry-picking misinterpretation.
Give you an idea of how ridiculous these articles are, and I quote (sort of) …agent X sold a house the other day for $225,000 above the reserve… So what? Does that mean that the market is ON FIRE? NO! It could mean that the Agent mentally bashed the poor old seller into setting a ridiculously low reserve. It could mean the Seller was all sorts of deep do-do and had to sell before the bank did it for them. It could mean all sorts of things and yet here are these ‘gurus’ sprouting that this sale is ‘indicative’ of a market headed up, up and away. Bollocks!