Property prices tipped to plummet 12:00a.m. 19 March 2008 By Kathy Sundstrom
The Sunshine Coast property market should gear itself for hard times ahead, with leading real estate agents warning prices could plummet by as much as 30% in the next 18 months.
The top end of the market has already begun to feel the pinch of rising interest rates, soaring petrol prices and the stock market crash, with houses selling for less than their original purchase price in some suburbs.
REMAX award-winning agent Michael Knights said he was aware of properties which sold for $4 million in exclusive suburbs a year ago that were now on the market with a $3 million price tag.
His return from an international conference in Las Vegas has left him more convinced the Sunshine Coast property market is in for a rough time.
?The American real estate market has dropped by 60% and the worst hasn?t come yet,? he said.
?Houses that were selling for $600,000 are now $200,000 ? you can buy a house for $50,000 over there.
?And as the Reserve Bank continues to raise interest rates in Australia, we should expect a major downturn in the market over the next 18 months.?
Henzells Real Estate manager Peter Ford said that in the past two weeks he had noticed a change in market conditions.
?Two weeks ago in the mid-course of an auction campaign, buyers became wary, and it (a downturn) usually starts with buyers. They?ve become tentative to bid at auctions at any price.?
Auction clearance rates dropped dramatically across Australia at the weekend, with Brisbane the worst performer as only 24% of properties sold under the hammer ? less than half last year?s figure.
In Sydney, the clearance rate dropped below the 50%, with 48.3% selling ? a drop of 11 % on the same time last year.
Real Estate Institute of Queensland Sunshine Coast zone chairman Jean Hamer said she wasn?t aware of a drop in clearance rate at auctions on the Sunshine Coast yet.
But with purchases under the hammer having to be unconditional and banks becoming increasingly strict about loaning money, she said it was possible the impact could be felt.
?Selling under the hammer has never been as popular in Queensland as it has been in other states because most people arrange finance after the sale,? she said.
Mr Knight said the ?panic? hadn?t started yet, but ?it will happen and it will happen overnight?.
?Now is the time to do your homework,? he said.
He predicted a 10% to 30% drop in value, depending on the area and the position of the property, but said it wasn?t all doom and gloom.
?On the positive side, it allows for lots of opportunities for first home buyers to get into the market,? he said.
