It’s the second week of Spring and while the number of properties on the market keeps increasing, the Melbourne Herald Sun reports Real Estate agents are now being forced to desert some sellers who still have hopes of obtaining “dream 2010” prices.
James Hatzimoisis, Managing Director of Barry Plant, a Real Estate Agency with offices in Melbourne and Geelong told the Herald, agents need to make a commercial decision to drop the vendor when they demand substantially more than what the market is willing to pay.
The Herald Sun reported only two weeks ago that the median Melbourne property was dropping by $800 a week, thus each week the vendor refuses to budge on price, the more unrealistic the expectation becomes they will achieve their “dream 2010” prices.
JPP Buyer Advocates’ Catherine Cashmore who coined the “dream 2010” term told the Herald, the volume of stock on the Melbourne market is about 34% higher than last year. She believes between ten and twenty percent of those sellers are holding out for “dream 2010” pricing. “An agent only gets paid when they sell a property so if they are investing a lot of time into something they know is not going to sell, then there is no point in wasting time on it,” she said.
On Wednesday the ABS released national account figures showing second quarter GDP had surged 1.2 percent higher from the previous quarter dominated by the January floods. Economist had only expected a 1 percent rise. This caused Wayne Swan to seize the moment and reiterate the nation had every reason to be confident in its strong economic fundamentals. While the figures paint a picture of a “patch work economy” lead by a mining boom at the expense of the rest of the economy, part of the GDP rise (0.5pps) was due to an unexpected rise in household consumption, not consistent with retail spending figures at the time. But remember the GDP figures are for the second quarter, namely the months of April, May and June. We are now in September.
By Thursday, the mood had soured as ABS figures showed unemployment was starting to trend up with the unemployment rate coming it at 5.3% for the month of August. While this took the majority of economists by surprise, I doubt the same can be said for any our our readers. We know thanks to the Unconventional Economist that house prices leads unemployment. Consumers are less willing to spend, as seen in our Net Savings Ratio forcing businesses to shed staff and cut costs.
We have also started to see the first signs of GFC2 develop towards the end of July and after the reporting period of this weeks’ GDP figures. This is making employers freeze recruitment as they watch the market play out. Greece is now very close to default, the European Central Bank’s (ECB) chief economist, Jurgen Stark resigned on Friday and another global credit crunch is getting closer by the minute.
» Agents dump sellers over ‘dream 2010’ prices – Herald Sun, 11th September 2011.
» Doubts emerge about German participation in future bailouts – The Australian, 11th September 2011.