If you read any of a gazillion articles on the state of the residential home sales market across Australia you will be hard pressed not to feel an impending sense of doom. Even if you limit your investigations to the hard ‘facts’ of monthly sales statistics you will be convinced that doom is a foregone conclusion.
What always annoys me is that 90% of these pundits are predominantly talking about the Eastern states and it feels as though they and the whole of the Eastern states only want to drag Adelaide and the whole of the rest of Australia down. Misery needs company. But what do we have to do with all of that pig’s breakfast over there!?
Closer examination of the raw numbers tells its own story.
But why do commentators want to look at these numbers and use them to put the most pessimistic spin on the market? Maybe because bad news is the best news to the purveyors of doom.
In an article by Frank Chung of News.com.au on 6 May 2019 entitled, ‘House prices notch worst annual fall since GFC’ he said’
Australian house prices have notched their biggest annual fall since the aftermath of the global financial crisis.
House prices in Sydney and Melbourne fell 0.7 per cent and 0.6 per cent in April, CoreLogic figures released on Wednesday show, bringing their annual declines to 10.9 per cent and 10 per cent respectively.
The NSW and Victorian capitals are now 14.5 per cent and 10.9 per cent down from their respective peaks in July and November 2017, extending their falls further into uncharted territory.
And then if we weren’t feeling bad enough by then he wacks in another quote,
CoreLogic maintains its overall forecast of total peak-to-trough declines in Sydney and Melbourne of 18-20 per cent.
Then we find that CoreLogic are hopeless optimists with this beauty,
AMP Capital chief economist Shane Oliver is predicting deeper falls of up to 25 per cent. “The negatives weighing on the property market remain significant,” he said in a client note.
The prediction is that it’s all downhill in 2019 and at least half of 2020.
“A KNIFE, A KNIFE MY HOUSE FOR A KNIFE!”
It’s all over! Why go on?
But if you care to look more closely to the numbers it’s not so bad for Adelaide. Compared to Sydney & Melbourne dropping 10.9% and 9.8% in the 12 months up to March 2019 Adelaide had gone up by 0.8%. Only Canberra & Hobart did better.
Adelaide historically has always had a stable market. You may not make a killing in the best years but you won’t risk your shirt either. This is such a huge difference to the Eastern sea board. So why do we listen to these people? They project their negativity onto us and it does us no favours.
In March 2019 the Adelaide market suffered a 0.2% drop. Who could even detect that sort of a loss in any sale! It’s an irrelevant number except to statisticians dealing with numbers on a national scale spread over many 1000s of sales.
And always keep in mind that when the market goes pear-shaped in the Eastern states the rats leave the sinking ship there to search out our investments and that pushes up demand here; it’s probably kept our market in positive territory.
Of relevance to the whole Australian market though is the tightening of lending standards and the usual uncertainty that comes with pending elections. The election fears are not just the usual jitters but a real fear of Labor’s plans to end negative gearing and capital gains tax concession for property investors.
As for the bigger questions as to where the market is heading in the next 2 years there is little to no consensus which makes speculation somewhat pointless.
With a median price of $426,990 in Adelaide in this market you can still get anything up to a 10% price increase for your home just by preparing it properly using the guidance of a reputable agent. We have a lot to be grateful for in Adelaide.
Speak to us if you want to find out the potential for your home.