However, the housing bubble spread to Brisbane in 2001, and the Brisbane median house price essentially doubled (92% increase) in three years from June 2001 and June 2004. House price growth slowed for a few years, but picked up strongly again in 2007. Between March 2001 and March 2008, the Brisbane median house price increased by a staggering 168% - from $156,600 to $420,000!
At time of writing, there are clear signs that the Brisbane house price bubble has popped, along with the rest of the country. Various data sources point to a sharp contraction in the demand for credit, especially for housing. Newspaper articles have highlighted that sales in Brisbane are dropping whilst more houses are coming onto the market. Brisbane auction clearance rates have been below 30% for a number of weeks. At end of June 2008, there were over 20,000 more houses listed for sale in Queensland compared to the same time last year; an increase of 150% (4). And in the three months to May 2008, 1575 fewer Queensland houses were sold in comparison to the same period of the previous year, a decrease of 22% (5).
Clearly, people are trying to sell many more houses, but significantly fewer are willing to buy. This is having the effect of lowering asking prices on listed houses in mid 2008. It will also flow through to selling prices, negotiated discounts, and time required to sell.
It is important to note, however, that these changes may not become clear in the widely published data until late 2008 or early 2009 for a number of reasons. Firstly, the organisations that typically publish these data benefit from turnover, and therefore strong markets, of established and new housing, and publishing data is meant to be a positive influence on that, as well as free promotion. And secondly, most of these data are based on moving averages over 6 to 12 months, which have the affect of smoothing out the data so that the early stages of booms and busts are not immediately evident. Most likely, the first data to confirm the burstingg of the bubble will be the quarterly ABS data house price data.
Note, organisations that benefit from strong realestate markets include those in the realestate industry, property wealth advising and consultation industries, building and construction industries, and finance including mortgage broking and banking industries. Moreover, it is important to note that even state governments have become particularly dependent on increased taxes from increased property prices � property tax revenue increased 72% in 5 years! (6).
A counter argument to the first point above might be that organisations have provided data to be used in the quoted newspaper articles. But I strongly suspect that, at this early stage of the bear market, those organisations are attempting to �kick-start� some momentum back into the market by spreading a �buy on the dip� mentality. If they were successful, it would almost certainly be referred to as a �suckers rally� in the medium term. |
