Housing Price Drops

[33kft]

Might be partially true there is absolutely no inventory in the more ‘desirable’ suburbs. But those that do sell are still getting very good prices.

But if you're choosing whether to sell, you choose what price to sell at. It's not that once it is listed a property is at the mercy of the market, you are seeing sales of low-volume prestige property that have met the reserve at prices that the vendor has accepted.

Given a 50% clearance rate for Melbourne, I suspect there are few distressed sellers and many vendors holding their nerve. The mortgage belt might not be so empowered.

 

[downgraded]

Why aren’t the prices in inner Melbourne dropping?! It seems to only be places 10k plus out where credit crunch is hitting hardest.

And that's where people want to buy. The headline reductions are city averages, but desirable suburbs are barely moving in price, so the rest are falling faster still...

 

[bcworld]

Why aren’t the prices in inner Melbourne dropping?!

They are...I think it's very noticeable.

 

[OZDUCK]

The house next door to us was last sold in 2012 for $597,000. It is currently on the market and the highest offer after 3 months is $525,000. Most of the houses around here were built in the 1980's. We are in a 'middle class' suburb , lots of public servants, teachers etc, with good schools and transport links and are about 12 km from Perth CBD

 

[jakeseven7]

They are...I think it's very noticeable.

Please tell me where! Within 5km cbd.

 

[33kft]

Please tell me where! Within 5km cbd.

If you look at the Domain report, there are:
Collingwood $950,000 -15.60%
Brunswick East $960,000 -8.70%

Looking here and going slightly further out but staying with high demand suburbs, South Yarra is down 13.93% YoY, Prahran -9.08%, Toorak -31.63%, Brighton -19.98%

That said, what is real and what is a misleading statistic? I don't know nearly enough about inner city property to know whether reports like this are accurate.

 

[jakeseven7]

If you look at the Domain report, there are:
Collingwood $950,000 -15.60%
Brunswick East $960,000 -8.70%

Looking here and going slightly further out but staying with high demand suburbs, South Yarra is down 13.93% YoY, Prahran -9.08%, Toorak -31.63%, Brighton -19.98%

That said, what is real and what is a misleading statistic? I don't know nearly enough about inner city property to know whether reports like this are accurate.

Thanks for taking the time to share that one! I happened across that a few weeks ago as looking in some of those areas.

But you are right about the misleading statistics - the inventory that is being released is sparse and much lower quality than what was on the market even 9 months ago or so.

So I’m not surprised that on paper the ‘average of an average’ is down. What I’m experiencing is that the really good properties are still raking in the dollars, but are few and far between and have lots of competition.

Maybe I should buy a lower grade and do a major Reno....

 

[33kft]

Maybe I should buy a lower grade and do a major Reno....

Almost certainly. You're buying for the location, and your options are to settle for someone else's perfect or for your perfect. You can build a toorak mansion out in the suburbs but it isn't a toorak mansion (despite the efforts developers go to pretend it is). The vast majority of the value is in the land.

I tend to be pretty unemotional about these sort of things. If it were me, I'd be looking for something as close to empty land as possible, knowing that isn't possible in your target suburbs, but looking for something on an appropriate sized piece of land, that I would have no trouble getting a bulldozer in to make it a block of land...

 

[bcworld]

That said, what is real and what is a misleading statistic? I don't know nearly enough about inner city property to know whether reports like this are accurate.

I bought in St Kilda East 5 years ago. For 4 years I watched prices rise and rise. My comment above relates to following the auction results all that time and seeing a very noticeable drop, probably in the region of 10% or more for comparable properties. It's especially noticeable to me because a year ago we were considering upgrading and now I see what the same money buys and its a lot more.

 

[Haplo]

I work in the lending industry (as a lender) and would have to say the policy on actual living expense is quite harsh. There are two lines of argument here 1) past expenditure is a reflection of future expenditure and 2) people will adjust their discretionary spending in order to make the repayment they need.

I am on the camp of the second scenario as one of the effect when the rate rises and falls (and therefore repayment goes up and down) is the decrease and increase in discretionary spending, so once people know they have a mortgage over their head they will spend less in order to make repayment. Having said that, you can't assume people will go from $6,000 to $2,000 expense per month but something like $6,000 to $5,000 would be a reasonable assumption and the lender should factor that in when calculating living expenses.