housing market set to topple ?

he he he ! how cheesy are these real estate "institutes" ?

...According to the Real Estate Institute of Victoria (REIV):

The clearance rate this weekend was 74 per cent, a result consistent with the last few weeks and signifies ongoing healthy demand for residential homes at auction.

Oh, well, thats alright then.

The REIV reports there were 756 auctions, with 562 selling. Which is indeed a clearance rate of 74%.

Although we are interested to know what happened to the other 89 auctions which last week the REIV said were planned for this past weekend?

Because if you add those auctions that obviously didnt happen into the mix, the clearance rate drops to just 66.5%.

And based on the numbers from Australian Property Monitors (APM), as reported by News Ltd, just $93.3m in property sold over the weekend, down substantially from $239.3m the previous weekend.

Not to mention the big drop just two months ago when the press was going bonkers over the $1 billion worth of sales in Melbourne back in March.

Of course well accept thats not comparing apples with apples as theres bound to be a difference due to seasonality.

But we have received a number of emails from people who used to be in the real estate game suggesting that agents wouldnt report all of the auctions that failed to sell, giving the impression of a robust market.

Whether this practice still happens, who knows? It would make sense though.

Then there was this fab article sent in by JW:

Residex figures show 5347 Sydney streets now on millionaires row

The article comes from The Daily Telegraph.

It explains:

Boasting an address in millionaires row used to be the preserve of Sydneys elite. But thanks to the property boom close to one-in-five Sydney streets can now claim the same bragging rights.

And its not just Sydney, apparently Melbourne has 4,222 streets with a median price above $1 million per house, and even little ol Hobart has 13 streets with the median price above a million.

We think that takes top billing as an example of Preposterous Property Spruiking.

It seems pretty obvious to us that the Australian market is almost out of puff and therefore the spruikers including the mainstream press have to come up with any half-cocked statistic that makes it seem like buying property right now is a great idea.

But is this genuinely the top of the market, just before the steep and scary decline?

To be honest, we dont know. It looks and feels like it is. But somethings holding us back from calling it.

It just doesnt seem right. In our mind there are still too many people who agree with our view of a property bubble. For a contrarian thats an uncomfortable feeling. We prefer be stuck out on our own with no company but for the Goldbugs and stock market bears.

In fact, privately wed always thought the signal for the top of the housing market would be when the number of abusive emails into the Money Morning mailbag went off the chart. The type of email that would say, We didnt buy a house because of you and now we never will because we cant afford it you b@#$%^d!

But that hasnt happened. In total weve only received about three emails of a similar nature over the last eighteen months.

In other words, what Im saying is that while all the signs shout Housing Bubble, odds are the pop will happen when we least expect it. When no-ones looking. Right now there still seem to be too many people on the bubble-bursting bandwagon.

Even so, a collapse in 2010 still looks to be the odds on favourite, but if were honest we thought 2009 looked like an unbackable favourite at the time.

Were often asked what will be the trigger for the collapse when it happens.

While the banks are inseparable from the property market, our guess is the ultimate trigger for the collapse will come from the Reserve Bank of Australia (RBA). Just as the over-confidence of the government caused it to slash the wrists of the mining sector, thinking that because it had saved the economy it could do it again by killing the resources industry, so the RBA will suffer from its own bout of over-confidence.

Thats apparent from some of the recent speeches weve seen from the RBA, such as Dr. Luci Ellis comments last week about there not being a credit-fuelled bubble in house prices.

The RBA seems fond of pulling levers in its attempts to manipulate the economy, its now just a case of when it will pull one lever too many.

Stay tuned. The RBA meets for its monthly lever pulling session next week.


http://www.moneymorning.com.au/20100524/housing-market-topple.html
All content is - 2007 - 2010 Port Phillip Publishing Pty Ltd All Rights Reserved

We encourage you to republish our material, all we ask is that you provide a working text link
back to the original article on this site. More information on our free financial content.