I think it’s pretty clear that Australia is in the middle of a significant real estate bubble fuelled by speculative investment, tax incentives, and government stimulus.
Rather than harp on about all the reasons why explosive property appreciation isn’t good for the economy (and isn’t sustainable), I’ll just post some links to websites that serve as appropriate counter-balances to the wide-spread (and well-funded) property spruiking shenanigans that somehow pass for journalism in Australia.
General information:
- Bubblepedia: Wiki and forums discussing the Australian property bubble. I recommend subscribing to their RSS feed so that you can read articles they link to (and make up your own mind).
Blogs:
- Delusion Economics: “An Economic Realist Practitioners Blog with an Australian Slant.” Frequently updated; heaps of graphs.
- The Unconventional Economist: “A contrarian examination of economic and financial issues from an Australian perspective.”
- Steve Keen’s Debtwatch: “Analysing the Global Debt Bubble.”
Price histories:
- REFind: Property advertising history (“The best way to track Real Estate and rental price reductions for individual properties.”)
- Old Listings: Look at old listings (advertised prices for houses) per suburb, and browse through listings per street.
Philosophical / Political:
- Prosper Australia: “This land is your land.” Geoist group promoting replacement of all current taxes with land and resource rental taxes.
- Land Values Research Group: “Economics as if location matters.” Statistical arm of Prosper Australia.
- Earthsharing Australia: A sister organisation to Prosper Australia.
Suspicious:
- apm Home Price Guide: Used to list up-to-date monthly price changes. Now only lists year-to-date prices until ~3 months ago and a positive “long-term trend”. (Still useful as a reference for “discounting” though.)
- RP Data suburb reports: Only lists aggregated data and median prices, but the effects of (increases and decreases in) government stimulus are visible in many suburbs.
Do you have an opinion on housing prices? If so, please leave a comment.
This is fascinating, thanks for the great links to blogs.
Here is an interesting presentation by an economist trying to sell Australian housing to Singapore and Hong Kong based investors which is anti-bubble and data-rich (although the data, scales, and timeframes are obviously carefully chosen):
To me the most telling evidence that we are in a bubble is the fact that in 2006 the number of homes owned by investors and businesses overtook the number of homes owned by owner-occupiers. Ric Battelino: “the ratio of the number of dwellings to the number of households has been rising over time; as at 2006, there were 8 per cent more dwellings in Australia than there were households. Presumably, most of this surplus reflects holiday houses and second houses.” This is due to the can’t-go-wrong-buying-a-house mentality that has prevailed for the last 10 years.
Why do investors buy houses? Because they want to make money. What happens when external factors cause a slight downturn in the market? It could be that those 50% of houses owned by investors, now spooked, will flood onto the market and prices will drop suddenly. E.g. the bubble pops.
Anecdotally, driving around Perth in the last week or so I have noticed a sharp rise in the number of properties for sale, which I believe to be a direct result of the fact that Perth property prices fell in the latest figures.
Finally there are people out there telling the real story. Kudos for your blog site. This is very scary stuff. People in Australia just dont realize what debt can do to them. The thing people dont realize in Australia is that China and Australia are going to get hit like everyone else. I keep telling everyone in Australia you cant keep digging yourselves into more debt. The Aussie people are at record debt levels and keep digging. I think what has happened to the US is about to happen in Australia and China.
The Australian housing market is now at the ‘self-fulfilling prophecy’ point I believe. The percentages of vendors and potential purchasers who are convinced that a crash is on the way has now reached that crucial point where vendors feel anxiety and bring forward the selling of their homes and potential purchasers begin to hang back in the belief that what is cheap now – will be cheaper in a year or two’s time. The ‘more aware’ baby boomers are probably aware that a really serious house price crash is now almost certain. The ‘trigger event’ will probably be those two 0.5% increases in the ‘cash rate’ which an already very nervous RBA board will be forced to deliver in the second half of this year. Many ‘baby boomers’ are about to learn a lesson in demographics the hard way. They cannot sit out this coming crash.