Around the start of the year, almost every daily newspaper included headlines and numerous articles related to house prices. There were claims that if there was a recession in Australia, house prices in Sydney could fall by a whopping 25 to 30 per cent. This was huge news at the time, with people talking about this seemingly “inevitable” house price crash that was going to inflict itself upon Australia and that would be impossible to avoid.
If we look ahead further in the year, there are still dismal headlines about house prices and exaggerated, speculative views on the likely outcome. What didn’t seem very important or of interest in these articles was that over the last year, median house prices remained higher.
When you compare the June 2008 quarter to the June quarter last year, even when an elevated rate of inflation was accounted for, it can be seen that house prices had risen in Brisbane, Melbourne, Hobart, Canberra and Darwin. Although not on the list, after allowing for inflation, median house prices in Sydney over the same period were generally flat. A far cry from the expected 25 to 30 percent predicted fall. Sydney being the only city in Australia where house prices hadn’t risen is not an unusual situation.
The 2% cut in interest rates in the past three months, stricter credit conditions, fluctuating fuel costs and far higher food bills when compared to last year, have all helped to curb consumer confidence and as a result this has generated some weakness in current house prices.
When we put some perspective on these problems, the house prices problem seems to be seen as a much larger issue in Australia than it actually is. A weaker perspective for house prices is not the same thing as house prices falling dramatically, like the media was, and still is suggesting.
Although the weakness in house prices may be causing some economic problems, when we compare this to the United States, where house prices are down by 40 per cent or more in many places, Australia’s problem seems somewhat over exaggerated. Even in the UK there are house price falls around the country of nearly 20 per cent, with even more bad news expected to come.
Here in Australia there is a probability of house prices falling by around 10 per cent in some instances. What we have to take into consideration is that this is following the growth of 150 percent in some areas of Australia. Although we can’t deny the fact that house prices are falling, when we compare this problem to the American or UK experience, house prices in Australia don’t seem to be much of an issue at all and it is highly likely that this is just a temporary problem that will move to resolve itself in the future.
At The Quinn Group the team of legal and accounting professionals are able to provide you with comprehensive advice regarding all aspects of buying and selling houses, from drawing up contracts and carrying out settlements to helping restructure your finances to meet repayments or save for your dream home. So, if you need advice on anything housing related call us on 1300 QUINNS or click here to submit an online enquiry, and one of our team will contact you to further discuss your specific situation.