Friday, 25 October 2019

Australia’s remarkable property price turnaround: National house prices regain a third of losses in past two years


Price Report asks. "Will Sydney and Melbourne's prices keep rising?"


"Will Sydney and Melbourne's prices keep rising?"

Best Asia real estate editor's comments.

The answer to the above question is maybe.

Editor Lawrence at his Bali office 2019
Most of the real estate discussed below still does not pass my Real Estate acid test.

My acid test developed over 40 years of real estate investing is simple "Can I buy a three-bedroom home or apartment in any of the cities in Australia and rent it out for positive cash flow after expenses?"

"Can I buy a three-bedroom home or apartment in any of the cities in Australia and rent it out for positive cash flow after expenses?"

The answer is probably no for 80% to 90% of the properties that have had slight increases below.

Artificial temporary demand:

So why is the market moving up?

Don't forget that there was another artificial influence caused by Hong Kong homeowners wishing to protect themselves against Hong Kong protests which have grown in size and intensity over the last three months.

What happens if overnight Hong Kong protests stop?

I think you know the answer already. The artificial demand will stop for Australian real estate.

Then the fundamentals of Australian real estate of whether it is a good buy will go back to my acid test and it fails the test miserably.

Suckers Market.

This could very well be a sucker's market. 

What  I mean by that is a lot of people will notice this slight increase. The realtors and anybody associated with real estate will be publishing lots of articles and editorials creating this atmosphere that there is another bull market on.

And there maybe if they get enough suckers into it!

But what happens when the investors buy their properties and after a year realize they lost money because they cannot rent it out for positive cash flow?

You have already answered this question as well.

All investments run in cycles. The famous author Elliott concluded that all investments run in cycles similar to the wave pattern below.

If Australian real estate was a stock we would say it is a bear market rally, because nothing goes straight down. 

It always has rallies that fail. 

I believe right now we are in the middle of wave A-B in a classic Elliott wave. 

There is a good chance there is much more pain to follow.

If I was an Australian real estate owner right now I would look at this as an opportunity to sell whatever remaining properties I have in major cities and go for greener pastures.

There is no pasture that is greener than Australia's closest neighbor Bali.
View from nearby location of the Bali Luxury Retirement Villas
Prices here have already undergone a 30% to 50% downturn from 2014 to 2018 and now started back up.

They  should rise exponentially, in my professional opinion based on 22 years of living here, a minimum of 50% upwards to 100% - 150% in the next 5 to 15 years.

For the first time since 2010 I have bought a property for myself here for investment.

One that will cater to the demand from 25% of the world's population that are retiring baby boomers seeking low-cost homes where they can live like multi-millionaires with private maids for $200 month and a cost of living 70% less than most major Austrian cities.

TAWAR RAZAGHITWITTERJOURNALISTOCT 24, 2019

Australia’s housing market has recorded a remarkable recovery led by the capital cities that experienced the steepest downturn.

The national median house price has bounced back 2.7 per cent to $773,635 in the past three months ending September, according to the latest Domain House Price Report released on Thursday.

The national median unit price bounced back 1.8 per cent to $539,256 in the same period.

Domain senior research analyst Dr Nicola Powell said it was the first national quarterly growth Australia had seen since December 2017.

“The ability to service a mortgage has fallen, prices are still below their peak … [and] we have seen a subtle relaxation of lending,” Dr Powell said. “All of these factors together is helping drive that recovery.”

From peak to trough, the national median house price lost almost $65,000, Dr Powell said.

“They’ve now regained $21,000. They’ve regained about a third since the downturn. That’s a pretty stark comparison,” she said.

It was a similar story for units, with the median price shaving off about $43,000, she said.

“They’ve regained just $9000 … they’ve regained almost a quarter.”

House and units prices have rallied on a national level largely thanks to buoyant property markets in Sydney and Melbourne.

Median house prices
CAPITAL CITY SEP-19 QOQ YOYSydney $1,079,491 4.80% -1.60%
Melbourne $855,428 4.10% 0.00%
Brisbane $562,847 -1.00% -1.80%
Adelaide $538,550 -0.60% 0.70%
Canberra $738,864 -0.70% 0.60%
Perth $527,107 -1.00% -2.40%
Hobart $482,960 1.30% 2.60%
Darwin $521,651 1.00% -4.40%
National (excludes Darwin) $773,635 2.70% -1.00%
Source: Domain House Price Report

Sydney

Sydney’s steepest downturn since the 1980s has come to an end with the harbour city recording its fastest quarterly comeback – four times greater than any other three-month period.

The median house price jumped 4.8 per cent, gaining almost $50,000, to $1,079,491.

Unit prices rose 2.6 per cent to $694,840.

The surprise federal election result, which locked in favourable housing policies for investors like capital gains tax and negative gearing, slightly relaxed lending and falling interest rates had helped undecided buyers jump into the market.

“Buyers have been waiting on the fence … we’re seeing pent-up demand and some of those buyers are coming to the table,” Dr Powell said, adding that even more buyers would be attracted in anticipation of further rate cuts in the future.

She said despite the rebound, both house and unit prices remained lower than they were a year ago.

House prices are 9.9 per cent below the mid-2017 peak and unit prices 10.6 per cent below.

Melbourne

Melbourne house prices rebounded for a second consecutive quarter, also marking the end of its steepest downturn in two decades and recording the fastest recovery for the city in its property history.

Prices have rallied 5.5 per cent overall since the market bottomed out in March.

The median house price jumped 4.1 per cent in the quarter to $855,428, recovering half the money lost in the downturn, according to Dr Powell.

Melbourne unit prices have also bucked the national downward trend and hit their highest point on record in the September quarter, rising 3.6 per cent to $520,940. It is now the second-most expensive city to buy a unit.

“Falling interest rates have aided mortgage serviceability,” Dr Powell said. “Together with changes to serviceability assessment, mortgage lending has increased in recent months. The acceleration of prices is also supported by the exceptionally strong population and jobs growth.”

Brisbane

Brisbane property prices continued their decline – it was one of only two capital cities to record house price falls over the quarter and year.

Greater Brisbane’s median house price nudged down 1 per cent in the quarter to $562,847.

For units, prices fell 3.4 per cent to $375,179 in the same period. However over the year, they fell 5.6 per cent – the steepest annual drop in over 18 years.

Dr Powell said increased affordability has allowed buyers to purchase at a six-year low.

“Unit prices are 9 per cent below the 2016 peak, representing a $37,000 reduction,” Dr Powell said. “The ongoing decline in units has largely been explained by high levels of supply.”

Adelaide

Adelaide’s property market was subdued in the September quarter with house prices slipping from the record high achieved in the previous quarter.

The city’s median house price slipped 0.6 per cent to $538,550.

Units dropped 5.2 per cent to $302,756, making it the second most affordable of capital city to buy a unit, only behind Darwin.

Dr Powell said South Australia’s weaker job market had weighed on housing demand.

“Unemployment has been rising for more than a year, the second highest rate behind Queensland,” she said, adding that further declines in unit prices could be an indication that houses were the preferred type of home in Adelaide on top of higher levels of unit construction in the past year.

Median unit prices
CAPITAL CITY SEP-19 QOQ YOYSydney $694,840 2.60% -5.00%
Melbourne $520,940 3.70% 6.30%
Brisbane $375,179 -3.40% -5.60%
Adelaide $302,756 -5.20% -2.30%
Canberra $432,252 -4.40% -3.40%
Perth $344,672 2.80% -1.90%
Hobart $395,715 1.70% 10.40%
Darwin $294,951 -3.30% -7.10%
National (excludes Darwin) $539,256 1.80% -2.00%
Source: Domain House Price Report

Perth

Buyers continued to have the upper hand in Perth’s property market with house prices 14.4 per cent below the peak and unit prices 18.2 per cent lower than 2014 record highs.

The West Australian capital saw a 2.8 per cent increase in the median unit price to $344,672.

Meanwhile, the median house price fell a marginal 1 per cent to $527,107.

But Dr Powell said price falls had moderated, showing improved conditions across the housing market.

“The supply of new dwellings has been constrained, helping to create more competition among buyers,” she said. “With asking rents rising, rental yields improving, and lower purchasing prices, it makes Perth houses a more attractive investment.”

Hobart

For investors, Hobart remains the best performing city for capital growth.

Both house and unit prices experienced the strongest annual gain compared to the mainland cities.

The city’s house median grew 1.3 per cent in the past quarter to $482,960 – still the cheapest capital across the country.

Units grew 1.7 per cent in the past quarter and a whopping 10.4 per cent in the past year to $395,715, overtaking Brisbane for the first time this year.

Dr Powell said population-fuelled housing demand continued to influence price growth but the pace had eased from the booming double-digit highs.

“Despite the median house price increasing about $12,000 over the year, Hobart remains the most affordable capital city,” she said. “That said, with the lowest average wage, affordability has become increasingly stretched for local buyers.”

Canberra

Canberra house prices continued to weaken for the third consecutive quarter falling 0.7 per cent to $738,864.

Units fell even more by 4.4 per cent to $432,252.

Despite these drops, the city’s property market remains the third-highest of all the capital city markets.

Dr Powell said home owners in the nation’s capital continued to enjoy steady equity growth, which has risen annually for just over six years.

Darwin

Darwin recorded a mixed bag for house and unit price in the past quarter as it continued to be affected by weak economic conditions brought on by the end of the mining boom.

The city’s unit prices declined 3.3 per cent to $294,951 – making it the cheapest capital city to purchase a unit. But the median house price increased by 1 per cent to $521,651.

Dr Powell said prices remained well below peak values seen between 2013-16 when mining related construction was at its height in the Northern Territory.

“Population growth continues to drag on the housing market,” she said. “The decline in migrants from interstate and overseas may have reached a trough at the end of 2018, but … any upswing in the Darwin property market may still be a while away.”


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Owner, President, Director
Tel or Whatsapp +628123814014
Email: lawrenceptbali@gmail.com

For a free one-hour legal consultation you may contact my Partner & Wife Azizah regarding anything from Indonesian Laws, Establishment of legal companies, securing proper visas, Marital contracts including prenuptial's post nuptial’s, etc.

Tel or Whatsapp +628113864993

About the Speaker Lawrence. Is the Owner, President and General Manager of 14-year-old Pt. Bali Affordable Lifestyles International (PT. B.A.L.I.). Doing Business as Best Asia Real Estate

His spouse and partner Azizah, is a fully licensed Indonesian Notaris with a master’s degree in Indonesian Law specializing in real estate, corporate and Foreign Marital documentation. 

Together they and their 100 + professional staff provide a one-stop professional, efficient location for Buying, Selling, Leasing and Renting Asian Real Estate.


     
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     Head Office: Jl. Karangsari # 5, Sanur, Bali, Indonesia 80228 Tel. Office: 62-361-284069 Fax: 62-361-270143,
Mobile: or Whatsapp: English: 62-8123814014 Bahasa Indonesia: 62-8113864993 Email: lawrenceptbali@gmail.com Skype: baliagents  

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