The good news on property is that the auction clearance rate hit a 19-week high with 60% of the properties up for sale finding a buyer. But the bad news is that this story is one of sellers meeting buyers with the upper hand, with house price experts forecasting that there’s more pain to come for anyone wanting to sell.
Here are the less-than-happy revelations from the great Aussie sport of buying and selling homes, whose following outnumbers the fans of AFL and NRL:
- The total number of auctions in Melbourne on the weekend was 42.5% down on last year.
- Property experts tip one or two interest rate rises from the RBA will worsen the situation.
- The AFR reported that “SQM’s Louis Christopher said Sydney and Melbourne were on track to record calendar year price drops of 9 per cent and 7 per cent.”
- However, HSBC thinks Sydney will record a peak-to-trough fall in home values of 16%, meaning if your home was once valued at $1 million, you might now get $840,000!
As I’ve said, it’s not all bad news, but it’s only better than it was a few weeks ago. For example, this is what Cotality’s Tim Lawless told the AFR about Melbourne’s auction showing over the weekend: “The number of auctions held was up 11.4 per cent on a week ago, but held more than 30 per cent lower than a year ago.”
Anyone hoping to see at least a small positive sign should note this from Louis Christopher: “The clearance rates in Melbourne suggest a floor is emerging in terms of activity, but not yet in terms of prices.”
So, the good news might be that the volume plunge (the homes up for sale) might be nearly over, but the price plunge might have a longer road to deal with, and you can thank the RBA for that.
The Budget has escalated the price fall for property, initially created by the three surprise rate rises earlier this year, after the central bank thought inflation was on the slide in 2025, which delivered us three rate cuts.
However, Trump’s war with Iran has hit oil and petrol prices, which along with government spending by federal and state governments, has reinvigorated inflation, and that has given us rate rises, which tend to hurt house prices.
And then the Chalmers’ Budget has spooked not only investors but even the first homebuyers he was trying to help. These would-be buyers might see lower prices but they might also see a slowing economy, a less positive job market, not helped by the threat of AI and a Federal Government, whose policies are so anti-business that even the legendary union boss, Bill Kelty, has told PM Albanese and Treasurer Chalmers has slammed their policies.
In a SMH story on the weekend, Kelty said: “The PM is telling the country with glee that the price of property is falling, yet the unaffordability rate is increasing, because interest rates are rising and real wages are falling.”
And there was more from Kelty, who helped Keating muster the unions in the 1980s to accept wage rises linked to productivity. I have always seen this guy as a very smart cookie, and when he bags his beloved Labor party, he does it to make the current leaders get real. “You had the treasurer say workers should be happy because their wage share is increasing, but their real wages are falling,” he said in the SMH piece. “It’s just ridiculous and people get offended by it. They can’t pay the bills, and you tell them your share of GDP is growing.”
But he didn’t leave it at that. He also said voters are thinking: “Don’t insult me: that’s what they are saying. Build more housing and increase real wages, please. All you’re doing is saying to me, I’m battling in life, I’m a driver earning 80k a year, and I should be happy and say the share of GDP is going up.”
I always saw Kelty with his mass of curly hair as an angry koala, but he was damn smart and I was always happy that I didn’t have to debate this guy.
Of course, for the PM and Treasurer to deliver what he wants, they might need to start helping the people who risk their money to build homes and make Australia productive enough to reduce inflation.
they would still be overpriced after a 16% fall
Charmers is hopeless. Never heard of ‘due diligence’
The apparent fact is that Charmers and his supposedly university educated treasury team have left the Australian economy in gigantic mess.
This seems to indicate that every one of the treasury team are not economist, or none spent much time in the lecture rooms during the important lectures on supply and demand theory.
Due to the poor state of our economy, it appears in the last five years under their watch, none of them were smart enough to advise Charmers, Albanese, Bowen and Burke that their collective individual personal policies were sending Australia backwards.
Though, I was taught at school that we paid the public service heads, large sums of money to keep errant uneducated governments from making mistakes
Peter, I filled my diesel UTE on Friday it was $150 to fill it up. Before the Iran war I don’t remember it costing me more than $115. I’ve cut back my driving in a big way, I don’t need it for work I work from home 90% of the time. I’m thinking about all those tradies driving to their worksites every day. How are they going to manage? I know how, and so do you. They’re going to demand a higher rate for being on site. It’ll have to be paid and will hit the bottom line of sub contractors, so they’ll be looking to pass on these increases also. While the current housing correction is rightly seeing house prices fall especially at the mid to premium end of the market, there will be a floor at the entry level and that floor will be the cost of replacement. Allowing 1.6M migrants into Australia since Covid ended is starting to look like it might not have been a great idea. I think we’re snookered on housing. Expect more tents coming to a park near you.