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Asking Prices Reflect Vendor Struggle

Sydney property marketIn an article for the website Street News, Louis Christopher dissects asking prices, vendor activity, and a few myths like the “property bubble”, among other things.

Asking prices struggling

Vendors seem to be struggling all across Australia (with a few exceptions like Adelaide) with their asking prices. For capital cities, the asking prices for detached houses have fallen by 1.6% while they have retained their position for units.

Christopher argues that those really optimistic findings regarding the Sydney and Melbourne property market are not meeting the “asking prices” report. How can one be bullish about a market if asking prices struggle, asserts Christopher.

Sydney suffering, too (bullish predictions notwithstanding)

Sydney, the blue-eyed baby of Aussie real estate, may just be entering into the overvalued territory. While the implications won’t be too sudden, they will surely set in.

Price decline on the cards

There are experts who believe that prices across the platform will fall by nearly 20% to budget for market sustainability. Christopher finds this a wayward evaluation, too.

When read in the light of nominal GDP

The market may become overvalued to a certain extent but would never near the 55% mark (over nominal GDP) that it attained in the dubious times of 2003.

Christopher busts the “overvaluation” and the “perceived bubble” myth by suggesting that over the last 4 years, the market has considerably underperformed in comparison to the nominal GDP.

Despite a few streams of price correction here and there, it did not do much and in the mean time household income caught up quite well. This pre-empted any possibility of the market going into a grossly overvalued territory.

You can read the original article here.

No bubble in sight

We have traded in the great myth called the “Australian property bubble” for too long but the bubble is not coming anywhere near us. Aren’t the developers and builders on an overdrive? Which bubble presents such a scenario? In a market which bursts at its seams, developers become very cautious before taking up projects. Contrarily, I see houses coming up from vacant strips of land whichever street I take.

The median prices are completely within control and if there are overvalued areas, there are big loads of undervalued areas, too. As soon as government takes concrete steps to release housing inventory, we will see supply getting the better of demand.

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