Property prices in Sydney are falling fast, with the Luxury Harbour Suburbs taking the biggest tumble. Housing prices in the Eastern Suburbs fell 14% last quarter, with the Lower North Shore decreasing by an equally huge 13% for the same period.
It was interesting after writing my “View from the Bridge” yesterday to see Jonathan Chancellor write an article in the Sydney Morning Herald acknowledging the price slip. With Sydney’s median house price now officially at $536,000, $32,500 less than the $568,500 reached in early 2004, it is now time for vendors to get real or suffer the consequences.
I have witnessed the change in buyer activity over the last quarter and have cringed as some vendors have rejected offers from buyers that will not be repeated anytime soon. With the media now openly discussing the price fall and buyers already acutely aware of their power in the marketplace, we will continue to see vendors with unrealistic price expectations “miss the boat”.
I had an interesting conversation with an Eastern Suburbs vendor this week who protested loudly that prices had not decreased by 10% in the last quarter. She was right – they tumbled by a massive 14%! A vendor who rejects a reasonable offer or sets an unrealistic reserve price, is running the gauntlet of losing a considerable amount of money in the final wash up.
Prices are not going to increase for some time in Australia and the real pain is yet to be felt. It is impossible to predict how long the recession will last or just how deep it will gouge. What is clear is that interest rates will indeed keep heading south, negative inflation will continue, job losses with accelerate and house prices will continue to fall. What isn’t clear is by how much?