RECOVERY LEAD BY BOTTOM END OF MARKET
TRADITIONALLY a housing market recovery starts at the top with the blue-ribbon suburbs leading the way, but this time around any recovery will begin at the bottom.
And at the very bottom of Australia's housing market are the hard-hit suburbs of western Sydney. They are the "canaries inthe coalmine", says BIS Shapnel senior economist Jason Anderson.
When first-home owners and investors put a floor under flagging housing sales there, expect the beginnings of stability in the wider housing market.
In western Sydney that has started to happen, but only just, according to auctioneer Tony Fountain. Fountain was previously head auctioneer for agent Ray White, and now runs an auction business covering Sydney suburbs from Baulkham Hills to Liverpool, where prices fell up to 20 per cent last year. "We've had a stack of inquiries on property up to $300,000, but it's only really started in the past few weeks," he says.
Last October, the veteran auctioneer was a bear, saying the 100 basis points peeled off interest rates that month by the Reserve Bank would bypass the savaged housing market and serve only to prop up sales of plasma TVs and other areas of retail therapy.
But that turned out to be only the first of three big consecutive cuts. By December, 2.75 per cent had been lopped off official interest rates.
Yesterday rates tumbled a further 100 basis points and the federal Government announced an economic stimulus package of $42 billion, including $6.6 billion for community and Defence housing, as the economic outlook continued to darken.
The price falls, big boost to the first-home owners grant, and the lowest interest rates in 45 years have provided the spark that may ignite the lower end of the market.
"It could be a good year, like the early 1990s. It was a time when there was no bullshit with our vendors, a time when vendors were realistic," Mr Fountain says.
But that is all predicated on willing buyers, as well. While the buyers are certainly coming out of their shells at the lower end of the market -- also driven by forecast national rent growth of 8 per cent for 2009 after hefty rises last year -- the improvement will not be across the board.
This will be a more segmented housing market than at any time in recent history.
An improvement in turnover in the bottom end should spill into the middle market by 2010.
But the fortunes of the upper end, executive housing, coastal property and the mining centres, are tied to the shaky economy and its recovery.
With business, the share market and the mining sector hamstrung, the federal Government is throwing nearly everything it has at what it perceives to be the best engine of the economy, the housing market.
And at the very bottom of Australia's housing market are the hard-hit suburbs of western Sydney. They are the "canaries inthe coalmine", says BIS Shapnel senior economist Jason Anderson.
When first-home owners and investors put a floor under flagging housing sales there, expect the beginnings of stability in the wider housing market.
In western Sydney that has started to happen, but only just, according to auctioneer Tony Fountain. Fountain was previously head auctioneer for agent Ray White, and now runs an auction business covering Sydney suburbs from Baulkham Hills to Liverpool, where prices fell up to 20 per cent last year. "We've had a stack of inquiries on property up to $300,000, but it's only really started in the past few weeks," he says.
Last October, the veteran auctioneer was a bear, saying the 100 basis points peeled off interest rates that month by the Reserve Bank would bypass the savaged housing market and serve only to prop up sales of plasma TVs and other areas of retail therapy.
But that turned out to be only the first of three big consecutive cuts. By December, 2.75 per cent had been lopped off official interest rates.
Yesterday rates tumbled a further 100 basis points and the federal Government announced an economic stimulus package of $42 billion, including $6.6 billion for community and Defence housing, as the economic outlook continued to darken.
The price falls, big boost to the first-home owners grant, and the lowest interest rates in 45 years have provided the spark that may ignite the lower end of the market.
"It could be a good year, like the early 1990s. It was a time when there was no bullshit with our vendors, a time when vendors were realistic," Mr Fountain says.
But that is all predicated on willing buyers, as well. While the buyers are certainly coming out of their shells at the lower end of the market -- also driven by forecast national rent growth of 8 per cent for 2009 after hefty rises last year -- the improvement will not be across the board.
This will be a more segmented housing market than at any time in recent history.
An improvement in turnover in the bottom end should spill into the middle market by 2010.
But the fortunes of the upper end, executive housing, coastal property and the mining centres, are tied to the shaky economy and its recovery.
With business, the share market and the mining sector hamstrung, the federal Government is throwing nearly everything it has at what it perceives to be the best engine of the economy, the housing market.
SOURCE: THE AUSTRALIAN
