"In the property market, a fall in turnover is a leading indicator of a fall in prices".
Considering that this article was written June 1 2009, with the benefit of hindsight we can show that this is not the case in fact quite the opposite has occurred.
According to the essay Volume in property reached its peak in 2007 and according to "National Volume" chart was around 50,000 units per month and now in 2011 it is roughly 30,000 units per month so in the last four years there has been a 40% reduction in volume of sales.
Yet according to the ABS the average capital city property has done the following over those years.
2008: 8.2% 2009: -1.4% 2010: 18.4% 2011: -1.9%
Simply, during a 40% reduction in property volumes the broader market has increased around 23% in four years.
I'm not making any guesses as to where property prices will go but clearly the number of transactions in property is not a determinate of value in Australia's property market and nor is it a leading indicators of property values. Selling at the peak would have left you 23% worse off plus meant you had to tolerate rent inflation of 6% over the same period.
FYI, this article maybe better suited to the market forum as the 2007 peak in volume was pretty close to the top in equities if I am not mistaken.
