When credible players in business start talking about extraordinary falls in value for Australian property, we should all pay attention, right? Well yes. But we need to really pay attention, not just read the headlines. Commonwealth Bank did not predict drops of 32% in property prices. They offered projections based on various scenarios. Their worst case, which included a prolonged recession of over two years included this figure. Their expected outcome was 12% for Melbourne, just like the NAB expectation of 10%.
Since we have already seen declines of between 5 to 10% in Melbourne’s Eastern suburbs, a lot of the pain has already been felt. There is currently little hard evidence of this decline as very few have sold. And there are many still on the market at close to their original asking price. And there they sit… That’s why the statistics published each month aren’t showing this up yet. But agents on the front-line are fairly attuned to the current ebb and flow of demand.
Prices have fallen and will likely decline a little more. But the buyers are now flowing back and stock is quite limited, so don’t be counting on a bargain. Anyone looking would realise there are more properties being withdrawn than coming up for sale currently. As noted in a previous post, the tide is changing yet again, so if you find an appealing property, don’t count on being able to wait for a better price in a month or so. And no, sorry, no 30% falls are likely.