Argghhh! POP! There goes the bubble (again).
I knew it was too good to be true when the mean house sale prices for the suburbs where my home and investment property are (in Sydney) went up 3.8% back in July - so I was more or less expecting the -1.3% drop in Aug, and relieved by the more reasonable 0.7% increase in Sep. The bubble appeared to have finished deflating, with prices being fairly stable since Jan '05, and a small rate on increase (3%) seemed quite likely for the next couple of years, followed by a pick up again to the long term average of around 6% (for Sydney since the 1930s) as lack of new construction pushed up rents and made property investment returns more appealing again...
Not so! The Oct price estimate for my properties (based on the Sep sales median prices) is down -2.6%, and the long term graph looks more like prices are bumping along the bottom, than any sort of modest recovery. Yet another 0.25% interest rate rise was announced last Wednesday, so things are looking decidedly grim for Sydney real estate at the moment, with buyers expecting another 0.25% increase early next year. It's just as well that we don't intend to sell our investment property until the next peak in the property cycle at the earliest - maybe 5-7 years away.
Looks like I won't be hitting NW A$1m this month, or soon, but the culprit seems to be "Mr Property Market" rather than his more manic relation "Mr Stock Market".
personal finance, real estate