[staringclown]

More bleak times ahead for housing

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Opinion is divided on how long and how tough conditions will be, but most analysts say a rebound in 2012 is unlikely.

''The Melbourne housing market will struggle for most of the next year,'' said Dr Andrew Wilson, senior economist with Fairfax-owned Australian Property Monitors. ''I think we're headed for more of the same.''

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The city's median house price fell 6.3 per cent in the year to November, the worst decline recorded since the recession of the early 1990s, according to the latest figures from RP Data-Rismark.

Many forecasters expect prices to rise by no more than 3 per cent in 2012, matching inflation but not gaining much of the ground lost. The most optimistic outlook pegs growth at 4 per cent to 6 per cent.

But more bearish estimates say prices will ultimately fall 12 per cent from their peak in late 2010 before the market bottoms out.

Home owners are being warned not to expect any real improvement in prices at least until the middle of the year.

''The market is probably in better shape than if those [interest rate] cuts hadn't been made, but I don't think it's a reason to get out the champagne from a vendor's perspective,'' said Robert Papaleo, research director for Charter Keck Cramer. ''The bad news is going to override the good news.''

[Rocket]

staringclown, on 07 January 2012 - 02:58 PM, said:

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But more bearish estimates say prices will ultimately fall 12 per cent from their peak in late 2010 before the market bottoms out.

A bottoming out after a 10 - 12% fall grows increasingly unlikely.

We had a falls in late 2008 (that were not dissimilar) as some people were forced to sell, but government support quickly turned it around (a trick that won't work twice). The point being that the falls were quick as was the recovery. This however is dragging on. The more it drags on, the less likely it is to bottom soon and turn around quickly.

A similar thing can be seen in retail. We have become conditioned. Unless we see a discount or perceive a real bargain, we don't buy. We are willing to wait. We will walk away. We no longer have to have it now. We know that could cost us.

The governments of this world are guilty of the same (believing it will end soon). They should have embraced a short sharp depression. But no. They sought to drag it out in the vain hope of reducing the severity of what must come. In the process, they have set us all on a course that will lead to years of pain for many.

As mush as I hate to see my neighbor fall, those of us waiting on the sidelines with cash in hand will reap the rewards that come when the "more bearish estimates" prove grossly deficient. Time is on our side.

[mattau]

Yeah I think that the governments really did drag it out, and perhaps in their attempt to fix it, actually made it worse.

[savagegoose]

well its a question of what is most efficient use of money to support the economy voter sentimentt.