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Australian House Prices, Most Overvalued In World. (Read 25744 times)
It_is_the_Darkness
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Re: Australian House Prices, Most Overvalued In World.
Reply #30 - Mar 25th, 2011 at 2:25pm
 
Its a good example of Working Class Australia V Consumer Class Australia.
Lets face it - it 'pays' to be in Real Estate and Building Industry more than it does to be a Consumer (sucker!) to it.

Working Class will always be ahead of the Consumer Class here in Australia, unlike in North America and the 'world' it controls.
You gotta be in it to win it and that's why they say "service" is terrible here in Australia, because you the Consumer, really are the 2nd class citizen.
I know there are many Australians who live by the American Standard (like the Televisual/Newspapers), but it is Consumerism advantage by default.

So if you want Free Petrol, Free Beer, Free Food, Free Cars, Free Houses, Free Travel, etc, etc?
Then make sure you are working in the right industry and especially an Industry that is getting ahead like the Art Industry, not falling behind, like the Sporting Industry (just to name two).

Personally, I live in a Garage, am looking for good-cheap land and am gonna build my own house outta Straw Bale with nothing but the need to pay a Plumber & Electrician. Saves me a huge Loan, gets me a superior house and keeps me out of financial slavery in the meantime.

Hint: As a Consumer in Australia "Only Suckers can't go without" Do you really need all that rubbish from China in the first place?
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Sir lastnail
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Re: Australian House Prices, Most Overvalued In World.
Reply #31 - Mar 25th, 2011 at 2:31pm
 
It_is_the_Darkness wrote on Mar 25th, 2011 at 2:25pm:
Its a good example of Working Class Australia V Consumer Class Australia.
Lets face it - it 'pays' to be in Real Estate and Building Industry more than it does to be a Consumer (sucker!) to it.

Working Class will always be ahead of the Consumer Class here in Australia, unlike in North America and the 'world' it controls.
You gotta be in it to win it and that's why they say "service" is terrible here in Australia, because you the Consumer, really are the 2nd class citizen.
I know there are many Australians who live by the American Standard (like the Televisual/Newspapers), but it is Consumerism advantage by default.

So if you want Free Petrol, Free Beer, Free Food, Free Cars, Free Houses, Free Travel, etc, etc?
Then make sure you are working in the right industry and especially an Industry that is getting ahead like the Art Industry, not falling behind, like the Sporting Industry (just to name two).

Personally, I live in a Garage, am looking for good-cheap land and am gonna build my own house outta Straw Bale with nothing but the need to pay a Plumber & Electrician. Saves me a huge Loan, gets me a superior house and keeps me out of financial slavery in the meantime.

Hint: As a Consumer in Australia "Only Suckers can't go without" Do you really need all that rubbish from China in the first place?


I know people who live quite well on the dole. Their only worry is being breached by center link Wink LOL
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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.
 
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Sir lastnail
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Re: Australian House Prices, Most Overvalued In World.
Reply #32 - Mar 25th, 2011 at 3:05pm
 
Hey Lisa your favorite author has some updates for you Wink

http://www.moneymorning.com.au/20110325/why-australia-is-set-to-follow-us-path-o...

Quote:
Why Australia is Set to Follow US Path of House Price Doom

by Kris Sayce on 25 March 2011

Money Morning reader David wrote us an interesting note about the fall of house prices in the UK:

“I remember living in the UK sometime around 2006 – 2007 and house prices, like Australia now, were overvalued.  As soon as property went on the market they sold at crazy prices…

“Just as you predict here in this email house prices crashed about 18 months after their peak.

“The media blamed it [falling UK house prices] on the world financial crisis, which did have an impact but they were already on their way down.

“So many people forget a house is only worth what someone is prepared to pay for it.”

As time passes there’s always the tendency to compress events.  Looking back now, it’s easy to think all the economic problems started in September 2008… around the time Lehman Brothers collapsed.

But that’s not the case at all......
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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.
 
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It_is_the_Darkness
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Re: Australian House Prices, Most Overvalued In World.
Reply #33 - Mar 25th, 2011 at 3:19pm
 
Alas TheLastNail,
I work to earn my place in this country.  Sad

Just down the road, the Dole Bludgers are getting 'Brand New' Housing Commission TownHouses built for them, while other 'worthy', let alone "grateful" people pay higher rent everywhere else in Rosemeadow.
But we have a saying here in the South-West of Sydney: The "Housos" are the cultural refuse of the far North Shore.
Just like when I lived in Mt Druitt: it was the 'A-Holes' that played to the North Shore song of being labelled "Westies".
As for the North Shore of Sydney - well thats just a slice of the American influence now isn't it? Huh
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Re: Australian House Prices, Most Overvalued In World.
Reply #34 - Mar 25th, 2011 at 5:58pm
 
In a testimony to the US Congress, Dr. Bernanke said:

"House prices are unlikely to continue rising at current rates… a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near its potential next year."

In other words, in October 2005, Dr. Bernanke thought the US housing market would [cough] plateeeeeeeeau.  Sound familiar?

One year later, The Washington Post headlined, "Housing Slump Slows Economy".  It wrote:

"The cooling housing market sent a chill through the economy in the third quarter, helping to slow growth to its weakest pace in more than three years."

Interestingly, the Post also wrote:

"Heading into the final campaign stretch, President Bush [Ed note: remember him?] and other Republicans have emphasized the good economic news, such as the low 4.6 percent unemployment rate…"

[Needle scratches off record]

What's that?  The unemployment rate in the US was just 4.6% in October 2006.  More on that in a minute…

Then by the end of May 2007, MarketWatch reported that "U.S. home prices fall for first time since 1991".

It noted:

"U.S. home prices dropped 1.4% in the first quarter compared with a year earlier, the first year-over-year decline in national home prices since 1991, according to the S&P/Case-Shiller index…

"A year ago, home prices were rising at an 11.5% pace.  Prices have been falling for the past three quarters."

During that period, what was the US unemployment rate?  That's right, it was around 4.5%.  That's lower than the current Australian unemployment rate.  It also tells you the US unemployment rate is just as rigged as the Australian unemployment rate.

At that time there was no major shock to the economy.  In fact, the first of the big financial firms to collapse - Bear Stearns - didn't collapse until March 2008.  A full year after house prices had started to fall.

And even if you take the first signs of trouble at Bear Stearns - the USD$3.2 billion "self" bailout of two of its hedge funds - that was only in June 2007… months after house prices started to sink.  And still long before the market received a genuine shock to the system.

As I wrote in yesterday's Money Morning, in response to Jessica Irvine's terrible Sydney Morning Herald article:

"All that's required for house prices to fall is for people to think that house prices will fall.  Just in the same way that share prices can fall when they reach a peak.  Sellers look to get out first before everyone else gets the same idea."

This is what's playing out in Australia right now.

Housing discounted by half!

Each day we're getting letters into the Money Morning mailbag with examples of falling property prices.  Money Morning reader Rick sent us a flyer showing a Port Adelaide development having slashed up to 59% off the original listing price of some properties.

Or this one with a 51% discount to the original price:

And if that wasn't a sign of desperation, check out what the vendor is prepared to do in order to shift a dog of a commercial property:

"A single waterfront commercial property - offered at a price representing extraordinary value discount by 59%.  All State Government ‘Stamp Duty Conveyance' to be paid by the vendor saving thousands of dollars."

Wow!  Desperate?  You bet it is.

Today, Money Morning reader Katie sent us an article from The Advertiser in Adelaide, "Glut gives homebuyers an edge":

"The number of homes for sale is at levels comparable to peak spring season, forcing greater competition, industry experts say."

You know what more competition means don't you?  That's right, it causes prices to fall.

moneymorning.com.au

more good news for the average wage earner who would like to enter the housing market
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"When the power of love overcomes the love of power, the world will know peace." Hendrix
andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up.....
 
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perceptions_now
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Re: Australian House Prices, Most Overvalued In World.
Reply #35 - Mar 25th, 2011 at 8:41pm
 
Ex Dame Pansi wrote on Mar 25th, 2011 at 5:58pm:
In a testimony to the US Congress, Dr. Bernanke said:

"House prices are unlikely to continue rising at current rates… a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near its potential next year."

In other words, in October 2005, Dr. Bernanke thought the US housing market would [cough] plateeeeeeeeau.  Sound familiar?

One year later, The Washington Post headlined, "Housing Slump Slows Economy".  It wrote:

"The cooling housing market sent a chill through the economy in the third quarter, helping to slow growth to its weakest pace in more than three years."

Interestingly, the Post also wrote:

"Heading into the final campaign stretch, President Bush [Ed note: remember him?] and other Republicans have emphasized the good economic news, such as the low 4.6 percent unemployment rate…"

[Needle scratches off record]

What's that?  The unemployment rate in the US was just 4.6% in October 2006.  More on that in a minute…

Then by the end of May 2007, MarketWatch reported that "U.S. home prices fall for first time since 1991".

It noted:

"U.S. home prices dropped 1.4% in the first quarter compared with a year earlier, the first year-over-year decline in national home prices since 1991, according to the S&P/Case-Shiller index…

"A year ago, home prices were rising at an 11.5% pace.  Prices have been falling for the past three quarters."

During that period, what was the US unemployment rate?  That's right, it was around 4.5%.  That's lower than the current Australian unemployment rate.  It also tells you the US unemployment rate is just as rigged as the Australian unemployment rate.

At that time there was no major shock to the economy.  In fact, the first of the big financial firms to collapse - Bear Stearns - didn't collapse until March 2008.  A full year after house prices had started to fall.

And even if you take the first signs of trouble at Bear Stearns - the USD$3.2 billion "self" bailout of two of its hedge funds - that was only in June 2007… months after house prices started to sink.  And still long before the market received a genuine shock to the system.

As I wrote in yesterday's Money Morning, in response to Jessica Irvine's terrible Sydney Morning Herald article:

"All that's required for house prices to fall is for people to think that house prices will fall.  Just in the same way that share prices can fall when they reach a peak.  Sellers look to get out first before everyone else gets the same idea."

This is what's playing out in Australia right now.

Housing discounted by half!

Each day we're getting letters into the Money Morning mailbag with examples of falling property prices.  Money Morning reader Rick sent us a flyer showing a Port Adelaide development having slashed up to 59% off the original listing price of some properties.

Or this one with a 51% discount to the original price:

And if that wasn't a sign of desperation, check out what the vendor is prepared to do in order to shift a dog of a commercial property:

"A single waterfront commercial property - offered at a price representing extraordinary value discount by 59%.  All State Government ‘Stamp Duty Conveyance' to be paid by the vendor saving thousands of dollars."

Wow!  Desperate?  You bet it is.

Today, Money Morning reader Katie sent us an article from The Advertiser in Adelaide, "Glut gives homebuyers an edge":

"The number of homes for sale is at levels comparable to peak spring season, forcing greater competition, industry experts say."

You know what more competition means don't you?  That's right, it causes prices to fall.

moneymorning.com.au

more good news for the average wage earner who would like to enter the housing market


How you doing Pansi, haven't heard much from you recently?

Now, let me put some of this into context -
1) The Economy is 70% driven by Consumers.
2) The largest Consumer segment in the USA, as most other countries are the Baby Boomers
3) Consumers stop spending and start saving for retirement, at least 5 years prior to retiring.
4) The "official" Baby Boomer generation started retiring on January 1st, 2011
5) The Baby Boomer segment of the US Population is by far the largest, at around 80 Million.
6) The generation following the Boomers, which is Generation X, has a segment Population of around 45 Million.
7) Generation X have no where near the asset values & wealth of the Baby Bommers.

Now, can anyone tell me, where is the housing demand going to come from, particularly as the Boomers start dying enmass over the next 20-30 years?

Btw, similar Demographics apply in Australia!
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Re: Australian House Prices, Most Overvalued In World.
Reply #36 - Mar 26th, 2011 at 9:55am
 
<<How you doing Pansi, haven't heard much from you recently?>>

................................................................................
..........

Hi Perce, I'm well and dandy....just pop in from time to time to check out my favourite threads (yours)  Smiley

Keep up the good work, we all need to be kept informed and up to date. Seems the financial predictions from 5 years ago were spot on.
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"When the power of love overcomes the love of power, the world will know peace." Hendrix
andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up.....
 
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Re: Australian House Prices, Most Overvalued In World.
Reply #37 - Mar 26th, 2011 at 11:30am
 
Ex Dame Pansi wrote on Mar 26th, 2011 at 9:55am:
<<How you doing Pansi, haven't heard much from you recently?>>

................................................................................
..........

Hi Perce, I'm well and dandy....just pop in from time to time to check out my favourite threads (yours)  Smiley

Keep up the good work, we all need to be kept informed and up to date. Seems the financial predictions from 5 years ago were spot on.


Regretably, Yes!

As time progresses, it seems more likely that we are looking down the proverbial barrel!

Keep well!
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Re: Australian House Prices, Most Overvalued In World.
Reply #38 - Mar 28th, 2011 at 10:57am
 
Take into consideration too that USA citizens tend to drop off at 70 years of age unlike Australians that kick into the 90's.
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Re: Australian House Prices, Most Overvalued In World.
Reply #39 - Mar 28th, 2011 at 12:42pm
 
2.2 million live in poverty

http://au.finance.yahoo.com/news/More-Aussies-need-ACOSS-yahoo7finance-2141925027.html?x=0


first home buyers priced out of states ..

http://au.finance.yahoo.com/news/First-homebuyers-priced-abc-435036020.html


and stories kept go on and on year after year .. and those clowns in Canberra still have not realized .. yet .. why people just so sick of them one after another .. from Howard, Rudd, Juliar .. Brown ..
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Re: Australian House Prices, Most Overvalued In World.
Reply #40 - Mar 29th, 2011 at 2:56pm
 
Real Estate Industry
Forecasts Major Price Falls

“We anticipate a reduction in the median price from $601,500 in December last year to somewhere between 3-5% below that in March.” – Enzo Raimondo, CEO, Real Estate Institute of Victoria.

It seems it’s not just the so-called lunatic fringe saying the housing bubble has burst.

Yep, your editor has been called worse than a lunatic for saying house prices are over-valued.  It’s a good job we’re thick-skinned and can handle it.

After all, we’re not afraid to point fingers at others.  So it’s only fair we cop it on the chin when others attack us.  And we’re happy to cop it because ultimately, we know we’re right.

Make no mistake, a 3-5% drop in the median house price is big.  Especially if you’re mortgaged to the eyeballs.  For some, when you take into account the fees associated with buying and selling, it can mean the difference between walking away break-even or walking away with a big loss.

And I mean big.

A 5% drop from $601,500 is a fall of $30,075.

That’s a lot of money to lose when you’ve been told house prices always go up.

But as I’ve written before, the median house price number is misleading.  Because it only shows the value of houses that have sold.  It doesn’t include all those poor souls who are unable to offload the burden of an oversized mortgage on an overpriced house.

Throughout Australia there are thousands of people who just can’t afford to sell.

Thanks to the spruikers and government handouts, these people have locked themselves into a lifetime of servitude to the banks.

Why?

Too scared to take a loss

Well, imagine you bought a house for almost no money down at the peak of the market in 2009.  You put in a few grand of your own money, but most of the deposit came from the first home-buyer’s bribe.

Now you realise it was a mistake because you can’t afford the increase in interest costs, and you want to get out.  Only you can’t.  Because selling now means taking a loss on the property.

How can you lose when you didn’t put anything in?  That’s not fair.  But that’s what happens when you’re suckered in by bankers and spruikers.

Not only that, but because you’re in negative equity once you sell you’ll still owe the bank cash for the shortfall.  Not forgetting the agent’s fees and removalists and coming up with a deposit for a rental property.

What are the alternatives?  I mean, there certainly aren’t any savings to draw from because the mortgage is such a burden there isn’t any spare cash to save.

All the home owner can do is either resign themselves to living in debt-ridden poverty – in a big house – or try and get a personal loan from the bank to cover all the expenses.  To be honest, that’s probably the best option.

But few will take it.  They’ll prefer to wait until the value of housing has fallen even further and the negative equity is even larger.  At that time, with higher interest rates, they’ll have no choice but to bail out.

Not a day goes by without tales of personal housing disasters hitting the Money Morning mailbag.  Most of them I can’t reprint here for fear of identifying the writer.

But here’s a classic example:

“My brother is looking at buying his first house this year.

“He has his eyes on a place in Coburg / Preston that is being sold via private sale.

“The owners tried to sell it last year at auction with a reserve of $795K but it didn’t sell.

“The owners now want $680-700K for it.

“My brother got an independent valuer in on the weekend who valued it at around $630-650K.”

This is a key point.  Houses like this have been massively overvalued.  We’re sure in this case the vendors saw a similar house in the street selling and thought, “Ours is better than that”, or “If they got that for theirs, we’ll get this for ours.”

Twelve months later, realisation is setting in that house prices were stupidly high.

cont.....
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"When the power of love overcomes the love of power, the world will know peace." Hendrix
andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up.....
 
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Re: Australian House Prices, Most Overvalued In World.
Reply #41 - Mar 29th, 2011 at 2:57pm
 
Even if they get the top-end of their asking price, it’s still more than a 10% reduction.  But if they’re not careful, they’ll be lucky to even get the valuer’s price by the time the market crash has finished.

Then there was this letter:

“In regards to the falling house prices, you are spot on the mark. My wife and I are just about to put our house on the market and we will be lucky to get what we paid for it 12 months ago after putting an extra 20K into it.

“We live in ______ on the coast just east of ________ in Qld. Both places next door to us are for sale and there are ~70 houses for sale in ______ between 400 - 450K (hopefully our price bracket).”

So much for “marvellous water views”

Or this one, also from Queensland:

“As of Saturday 5.30 pm, Buderim, I have direct personal experience to support your contention that Aus. house prices have collapsed.

“A beautiful, tasteful, 4 bed, 2 bath house with a view to die for, magnificent landscape garden, recent kitchen and bathrooms, terraces, etc, on a 2,500 sq mtr lot, in a highly sought after area of Buderim was auctioned by NEXT.  Only one real bid of A$750K, passed in!  I believe sold post auction for no more than 850K.  Point is this house has been for sale since last September, when it was marketed at over 1.5 Mil.”

Ah, a “view to die for”.  That would be the equivalent of Jessica Irvine’s “marvellous water views”.  Well, it hasn’t done much for this home.  Almost a 50% drop in the asking price.

It shows you even places with a view can become overpriced.  And that places with a view can suffer catastrophic price falls.

But why would someone take such a huge cut?

We can only guess.  Our guess is you’ve got a whole bunch of people who bought in thinking prices would always go up.  They thought there would be a greater fool who would pay an even higher price.

They probably even used equity against another property as the deposit.

But the greater fool investment strategy will always end messily.

As I say, there are many more stories coming through each day.  But that’s not the only thing.

Where are the cashed-up investors now?

There’s a remarkable silence by the property investors.  As recently as twelve months ago, we’d receive letters from property investors saying, “I’m looking forward to house prices falling because then I can buy even more properties, so bring it on sucker.”

But now, not a single word from them.  They’ve obviously just realised their so-called wealth isn’t wealth at all.  It’s just equity in property.  And equity in property isn’t wealth.

Equity in property is just a pre-approved loan from the bank.  Because as soon as you withdraw equity it becomes debt… how can that be wealth?  It isn’t.  Besides, as you know, even pre-approved loans are subject to approval.

And right now, we’ll guess banks won’t lend against existing properties because they’re worried about falling prices.  This lack of credit growth is what’s helping push prices lower.

But that’s what happens with Ponzi finance.  It becomes self-fulfilling as the banks see the writing on the wall and don’t want to be the one left holding the baby [Ed note: apologies for the mixed metaphor!]

Think about it, how do banks decide on the valuation of a property?  That’s right.  They require a valuation.  And as our reader noted above, the valuers are pricing down valuations.

cont.....
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"When the power of love overcomes the love of power, the world will know peace." Hendrix
andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up.....
 
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Re: Australian House Prices, Most Overvalued In World.
Reply #42 - Mar 29th, 2011 at 2:59pm
 
Lies, damned lies and statistical lies

But that hasn’t stopped the spruikers from keeping on keeping on.  In a recent article for Switzer.com.au, Comsec economist Craig James writes:

“There is an old adage in economics – there are lies, damned lies and statistics.  And when it comes to the issue of housing valuations and affordability, there is a lot of data that can be categorised in the two former terms and much less in the latter.”

So what does Mr. James do?  That’s right, he quotes the following statistic:

“However Glenn Stevens did say something else: ‘The other thing I’ll say is that it’s quite often quoted very high ratios of price to income for Australia, but if you get the broadest measures, a country-wide price and a country-wide measure of income, the ratio is about 4.5 and it hasn’t moved much either way for 10 years. And that is higher than it used to be, but it’s actually not exceptional by a global standard as far as I can see.’

“What he was quoting here was the analysis by Rismark International and RP Data on housing affordability. To measure home affordability you need to compare all incomes across Australia with all home prices across Australia – city and regional. Unfortunately, a raft of industry bodies don’t do that and it produces spurious outcomes.”

It seems Mr. James has rather missed the point of the adage about “lies, damned lies and statistics.”

The adage is ironic, it’s not literal.  It’s not a statement to say that statistics are truthful compared to lies and damned lies.  The meaning of the statement is that statistics are worse than lies and damned lies.

That you can trust a statistic less than any lie.  To make it easier to understand, perhaps we could make the statement more literal: There are lies, damned lies and statistical lies.

There.

Because you can take a statistic and do anything with it to support your argument.  Hence it’s worse than lies and damned lies.

So for Mr. James to rely on a statistic from companies that provide data to the housing industry misses the point by a wide margin.

Mr. James winds up with:

“The bottom-line is that Australian home prices aren’t so extraordinary after all. Once foreign investors start focusing on the facts rather than fiction then perhaps a few more dollars will start flowing Down Under. Because it is a concern abroad, and it’s not being helped by misinformation.”

Really?  Perhaps Mr. James should look at some of the other statistics he’s so fond of.  For instance, the median house price in the United States is… $202,000.

That’s less than half the median house price in Australia.  About a third of the Melbourne median house price.

But, then again, that’s just a statistic too.  So do with it what you will.

But we don’t need statistics to know that Australian house prices are overpriced.  However much the spruikers and bankers try to talk it up, the slowing and contracting of credit in Australia will be the ultimate reason for the continuing house price crash.

It’s getting worse by the day.  And we’re getting more letters by the day to prove it.

http://www.moneymorning.com.au/
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"When the power of love overcomes the love of power, the world will know peace." Hendrix
andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up.....
 
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Re: Australian House Prices, Most Overvalued In World.
Reply #43 - Mar 29th, 2011 at 3:52pm
 
Vote Independent and have your 'local' area looked after first.
Look at Sydney with Clover Moore and how happy they are.
Look at Lake Macquarie and how they loved their 'independence' especially during the water crises.

Vote Independent and your local area will be looked after before the State and before the Federal level which looks after Overseas first.

Australians are so daft sometimes, they just 'ding-dong' between ALP & Liberals.
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Re: Australian House Prices, Most Overvalued In World.
Reply #44 - Apr 16th, 2011 at 1:44pm
 
More good news on the housing front.
.....................................................

Melbourne home property prices plunge

MELBOURNE'S property bubble is bursting, with $400 a day wiped off the average house price in the past three months.

After peaking at $601,000 late last year, the median price has fallen to $565,000 - down $36,000.

The 6 per cent slump is the biggest quarterly drop in more than two years and one of the biggest the Real Estate Insititute of Victoria has recorded since the height of the global financial crisis.

It has raised hopes for buyers desperately trying to break into the market and will create speculation over whether a crash is coming.

REIV chief executive Enzo Raimondo said that although it was normal for prices to ease at the start of the year, it was clear the market had turned after an astonishing period of runaway growth.

"The honeymoon for sellers is over," he said.

Housing Industry Association economist Matthew King said Melbourne's "red hot" 20 per cent growth last year was ending because of the sting of seven successive interest rates and prices that had become out of control for too many people, turning them away.

"We would expect very little, if any annual growth this year," Mr King said.

"Mortgage lending rates are above average again and that has taken the wind out of the sales.

"Of course certain areas will continue to perform better than others. You would expect inner suburbs to still do well."

Affluent areas were hammered in the March quarter. Essendon suffered the biggest hit, down 18.2 per cent to $900,000.

Balwyn slid 8.4 per cent to $1,475,000. Brighton slipped 7 per cent to $1,508,500.

It is the worst performance for Melbourne homes since a 6.7 per cent fall in the December quarter of 2008. However, the median is still 8.7 per cent higher - $45,000 more - than in April 2010.

Units, apartments and town houses dropped 4.2 per cent for the quarter to $460,000. Melbourne is still the second least affordable city behind Sydney.

Mr Raimondo warned vendors would need to adjust their expectations.

For suburbs recording at least 30 sales in the past three months, Kew was the dearest at $1,945,000.

Most affordable were Wyndham Vale ($307,475), Cranbourne ($325,000) and Werribee ($327,000).

Regional Victoria's median is stable at $320,000.

Yesterday's latest Westpac-Melbourne Institute Consumer House Price Expectations report confirmed people are more pessimistic about the outlook for values.

http://www.heraldsun.com.au/news/melbourne-home-property-prices-plunge/story-e6frf7jo-1226039922655
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