Reading Time: 2 Minutes
I was perusing the interwebs whilst trying to put BabyFrugalSamurai down to sleep last night, and an article happened to catch my eye:
House prices fall in 40pc of Sydney suburbs
“House prices are now falling across two out of every five Sydney suburbs, a five-fold increase from a year ago, and the highest level in 20 months… the share of Melbourne suburbs where house values dropped in the past three months also blew out to 76.3 per cent, six times higher than last year”.
Holy smokes was my initial thought, wondering if the precipitous drop had ensnared the suburb where we reside.
I quickly scanned the rest of the article, and breathed a sigh of relief when I couldn’t spot said suburb.
“Looks like we dodged a bullet darling”, I whispered to BabyFrugalSamurai.
She looked at me, and yawned.
Turning back to the article, I read:
“Sydney home values fell by 0.1 per cent last month, the first monthly decline in almost two years, while Melbourne dipped by 0.2 per cent as the housing outlook dimmed”.
0.1%? Surely that’s just a rounding error.
Hardly enough to get your underpants twisted in a knot.
Although what is more knotting, and which I think is driving the stagnation, is the high number of property listings which have come onto the market:
“Total listings climbed by 7.1 per cent across Sydney over the past four weeks to November 3 compared to a year ago and lifted by 4.2 per cent and 4.9 per cent in Melbourne and Brisbane, respectively.
Total listings are now 13.2 per cent above the previous five-year average in Sydney and 13 per cent higher in Melbourne”.
I explained to BabyFrugalSamurai that any high school economics student will tell you if supply increases whilst demand remains relatively stable, then prices will fall.
She just looked at me blankly.
This increase in supply can also be seen here:
Practically every major city (bar Darwin) has seen a double digit growth in new listings.
Couple this with higher interest rates, higher cost of living and a general sluggishness in the economy and it really isn’t a big surprise to see house prices have either slowed down or gone backwards across our cities (although Perth and Adelaide still fighting the good fight).
“What would I be putting my money in then you ask?” I turned to BabyFrugalSamurai.
She was almost drifting off.
Well, first of all – I honestly would not be putting my money into the Australian residential property market right now, there are so many better risk/reward payoffs at the moment (see cryptocurrency).
But if you twisted my arm, I would be taking a long hard look at Melbourne.
I’ve said it before, but I truly think Melbourne, from an investors point of view offers the most attractive bang for buck right now.
It has the population base, immigration levels, job opportunities and economic levers to grind through most downturns.
Forget the ridiculous levels of state government regulation and bullshit new taxes being imposed – just factor those numbers into your calculations.
You make money when you buy – and certainly from a counter-cyclical stance, investing in Melbourne to me, makes the most sense.
And the beauty is you don’t even have to act swiftly.
No, like I’ve said time and time again – the property market is one giant cruise ship.
It takes a helluva long time to get going, and a helluva long time to stop.
So you’ve got time, be patient and get all your ducks lined up now, if you’re seriously considering buying another property.
I looked down at BabyFrugalSamurai.
She had fallen asleep.
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