Prosper affirms ‘Don’t Buy Now!’ warning
18 August 2011
MELBOURNE:- Landowners are about to be economically decimated as Australia’s severely unaffordable house prices reverse, says Prosper Australia.
- ‘Stale Stock’ on the market in Melbourne is growing exponentially
- The sheer volume of unsold property is now indigestible
- Recent price falls must accelerate
“We confirm our earlier warning to prospective homebuyers – those entering the market or trading up to more valuable properties – to stand aside as prices fall,” Prosper Australia Campaign Manager David Collyer said today. “Your buying will not arrest this powerful economic trend.
“Anyone purchasing at current price levels will suffer very substantial capital losses over about the next six years. Those who rely on a large mortgage will likely plunge into negative equity, where the property is worth less than the loan it supposedly supports.
Prosper has been tracking Melbourne’s ‘Stale Stock’ figures – property on the market for more than sixty days and unsold – as a quick indicator of change to the supply and demand equation and as a price change predictor. The raw data is from SQM Research.
“In the last four months ‘Stale Stock’ in Melbourne postcodes 3000-3207 has doubled, ballooning from 19,800 to 38,522. In the wider Melbourne and environs, 60,253 houses have been on the market for more than 6o days and remain unsold.
“At a modest $450,000 per house, that would be $27 billion in surplus housing just sitting there.
Notable hotspots include postcode 3029 Tarneit/Truganina/Hoppers Crossing (2289 stale properties), 3030 Point Cook/Werribee (3135), 3064 Roxburgh Park/Craigieburn (1269), 3076 Epping (913), 3175 Dandenong (834), 3199 Frankston South (919), 3337 Melton (1683), 3338 Melton West (920), 3754 Doreen/Mernda (1774), 3810 Pakenham (1840), 3977 Cranbourne (2234).
‘Stale Stock’ are properties whose sales campaigns have failed. Gardens were primped, interiors polished up, advertisements placed, open for inspections conducted, auctions run and … no sale!
While there are genuine reasons why some properties are slow to move, current stock levels point to other factors.
“Buying has simply dried up. A couple with two good incomes and a solid depost cannot afford these prices.
“New construction has slowed to a crawl because of the unsold stock. This means widespread layoffs in the building trades as projects are completed and new starts deferred,” Collyer said.
“We are entering the spring selling season when property is brought to market in volume. With this ‘Stale Stock’ already overhanging, prices must change.
“Across Australia, homeowners have eagerly bought the story property is wealth and prices can only rise, inflating the market price of Australian land to a ridiculous $3.5 trillion. Unfortunately, these values have been built on debt and we face difficult times as this frenzy is unwound.” ENDS