House price decline hibernates for winter

If the Australian men’s swimming team can teach you anything at this Olympics, it’s not to be cocky. This turns out to be sound advice considering I was almost certain the Australia Bureau of Statistic’s house price index for Australia’s eight capital cities would have notched up six consecutive quarterly price declines today.

But as a surprise, the index recorded a 0.5 per cent increase for the June quarter 2012. According to the ABS, house prices are back on the rise. This is sure to bring out the sprukers, claiming the bottom of the market.

Darwin took the lead in lane 5, recording a 5.1 per cent increase for the quarter. Sydney scored silver with a 1.4 per cent rise, and Perth took bronze notching up a modest 0.6 per cent rise.

Prices continued to fall in Canberra, Hobart and Melbourne.

While today’s data could be construed as some sign of a recovery, the same can’t be said for housing credit growth currently sitting at the lowest level since records existed 35 years ago. It’s still very early days in the deleveraging process. It’s more likely the house asset price decline in Australia is merely on hold.

» 6416.0 – House Price Indexes: Eight Capital Cities, Jun 2012 – Australian Bureau of Statistics, 1st August 2012.


  1. Our economy is not looking great – just look at PMI out today. Wages are too high, productivity and consumption too low. Unemployment is starting the long trend up. The canary in our mines is dead.

    I suspect any sheep that jump in now at the ‘bottom’ wont see a thing coming until it is too late. Don’t get caught in the hype.

  2. When the property crash happened in Ireland interest rates were around 2-3% and unemployment was 5-6%. People still bought property when prices dropped 5, 10, 20%. Everybody thought they couldn’t go any lower and it would recover. They’ve dropped 60-70% since the peak in 2006. It’s had a catastrophic effect on the country and some poor individuals who bought at the top have been ruined.

    I hope this doesn’t happen in Oz but the similarities to the Irish crash are uncanny. The exact same bullshit is being fed to the public people with vested interests in property. I don’t think buyers are on strike. I just think people have realised what a scam it is and have finally come to the conclusion that a property in the burbs of any Australian city isn’t worth a lifetime of debt and stress.

    I wonder were we’ll all be in 2 years…………

  3. I flat out dis-believe this ABS data. It is complete folly.

    New ‘home and land packages’ began at $275k a couple of years ago, now advertised as $220k.

    The only possible justification for this data can be that traffic in the upper end of the market is skewing the data. There is simply no quantifiable data that suggests prices are rising.

  4. Just got back from Darwin. Young blokes who have been working the mines for the last few years seem to be investing their cash in Darwin property. FIFO only operate Darwin and Perth, if you live elsewhere you make your own way at your cost.
    Qantas have cut back flights from West to East due to lower tourist numbers and it’s a pain in the arse waiting at airports for connecting flights back to the eastern states.Best set up camp in Darwin or Perth if you work in the mining industry.

  5. #Damian, you have totally nailed it. A property in the burbs isn’t worth a lifetime of debt and stress.

    The whole “Aussie dream thing” is fed by a daisy-chained coterie of vested interests. Joye appears to be one of them… yet he may well be right… land prices could be back on the up-and-up from here. However, I suspect he is knowingly obfuscating the article’s true purpose; hoping instead, the reader will infer the intention: Average wage-earner? It’s time to jump back in to the market.

    Real Estate advertising and propaganda leads with images of young couples getting on the property ladder; but that’s as cynical a representation of the actual market as is the packaging of milk with earthy, Drizabone farmers; or cigarettes with cowboys.

    Just think about it:
    When you’re lying on your death bed, will you say to yourself: “I wish I owned my house” ?
    Of all the things you can do to give your life meaning and purpose, there’s not one that can’t be done whilst living in a rented home.

  6. FWIW… The banks sold off all their branch premises years ago and leased them back… Property is obviously a great investment.

    Owning a house is just one means to an end ‘stable shelter’… But it’s not the exclusive, singular, dominant, there is only one way to achieve this at all costs, end in iitself…

  7. House prices may go up or they can go down.
    But I won’t be buying until they are around 3.5 times the average income. Simple……..

  8. @spruiker Buster

    Good for you

    Prices are roughly that ratio in the USA now (after deviating for @ 8 – 15 years) and they were roughly that ratio in Australia for @ 100 years

    Renting would consume a similar cashflow as a 3.5 ratio (more or less)

  9. Well said Damian:

    “I just think people have realised what a scam it is and have finally come to the conclusion that a property in the burbs of any Australian city isn’t worth a lifetime of debt and stress.”

  10. “I hope this doesn’t happen in Oz but the similarities to the Irish crash are uncanny.”

    You might be correct but I doubt it. Australia is very different to Ireland (and the USA).

    For starters, Ireland does not have monetary sovereignty so it cannot perform currency/monetary stimulus and the USA has the world’s reserve currency which also limits stimulus. Australia is a small open country whose currency has a history of crashing during times of credit stress – which insulates us and acts like a stimulus.

    So in Australia it is unlikely that we’ll see a fast nominal crash like in Ireland/USA. The most likely outcome for us the “slow melt” deflation of our bubble like Japan.

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