Australian Mortgage and Loan Information

Early signs of a correction?

The information below is taken from: w w w. a b s . g o v. a u

“HOUSE PRICE INDEXES: EIGHT
CAPITAL CITIES”

“ESTABLISHED HOUSE PRI C E S
QU A R T E R L Y CH A N G E S

# Preliminary estimates show the price index for established houses for the weighted
average of the eight capital cities decreased 0.8% in the December quarter 2008.

# The main contributors to the decrease were Melbourne (–1.7%), Brisbane (–1.2%), Perth
(–0.9%), Sydney (–0.3%) and Hobart (–1.0%). These decreases were offset by increases
in Adelaide (+0.3%), Canberra (+0.7%) and Darwin (+1.6%).

# The movement in the preliminary established house price index between June and
September quarters 2008 has been revised from an estimated decrease of 1.8% to a
decrease of 2.4%.

AN N U A L CH A N G E S (D E C EM B E R QU A R T E R 20 0 7 TO DE C EMB E R
QU A R T E R 20 0 8 )

# Over the year to December quarter 2008, preliminary estimates show that the price index
for established houses for the weighted average of the eight capital cities decreased 3.3%.

# Annually, house prices rose in Darwin (+3.8%) and Adelaide (+2.0%), and fell in Perth
(–6.7%), Sydney (–4.1%), Canberra (–4.1%), Melbourne (–3.2%), Hobart (–3.1%), and
Brisbane (–1.4%).

# The movement in the preliminary established house price index between September
quarters 2007 and 2008 has been revised from an estimated increase of 2.8% to an
increase of 1.6%.”

These interesting figures come form the Australian Bureau of Statistics and were released 02/02/2009.

What do they mean? I think they say, despite having the lowest historical mortgage rates in recent history and a bumper crop of first home buyers armed with their grants and bonus’s, we have had a very small correction in values in the major cities and some continued climb in the lesser metropolices. This was to be expected! I am hunting for some figures on commercial property, I think these may give a better guide to the real situation.

Consider your current residential property position. it may be wise to take some profit. We may be in the “eye” of the storm? And what a storm it is!

Government stimulus package and historically low lending interest rates will buy some time, but the risk of a massive correction in Australian house and commercial property prices is as high as it has ever been since the great depression. Over valued and in many cases in poor condition, Australian property has become decidedly on the nose internationally.

The International Monetary Fund has for some time voiced a considered opinion that: “Australian property is among the most overvalued in the developed world.“ International investors have heeded the IMF’s warning and are quitting their Australian holdings in the droves. New enquiries have all but dried up.

February 2009 is the perfect time to ready yourself for the turbulent time ahead. Consolidate your debts, sign your tenants to a longer lease, crack down on tardy payers. Repair and maintain your properties to keep them in top condition. Check your mortgage interest rate, get the lowest rate mortgage available or convert to interest only if you can and get some quality mortgage checking software.