If you want the reality - the real price decline - it’s the fourth worst since World War II, which is pretty bad too, although it lacks that catastrophic tinge which is there for those who wish to ignore inflation.
What might be of more concern is the commentary from NAB’s economic team in assessing net housing worth where the bank suggests: “Further declines seem likely given tighter credit conditions.”
And these folks should know. They are, after all, inside one of the nation’s biggest lenders.
For property investors the NAB report tops week a blitz of property data that can be summed up with one conclusion…prices are still going down and nobody knows when they will stop.
House prices fell or were unchanged in every major city across the last month. Meanwhile over the last 12 months the capital city average drop is 8.8 per cent, with the worst falls over the year being Melbourne down 10 per cent, and the best city being Adelaide which managed a tiny appreciation of 0.6 per cent.
But inside that latest confirmation of ongoing price deterioration comes some intriguing numbers on rental yields, which are going up when you might have thought they would be going down.
New figures from CoreLogic said rentals increased quarter on quarter in the first three months of the year with signs the one per cent increase was driven by regional properties. Capital city median rents are $465 a week, in regional centres it is $378.
What’s more, if rental yields are starting to rise in this market then what will occur if the ALP wins the election and goes ahead with cuts to negative gearing and the capital gains tax discount?
The easy answer might have been to check what happened when Paul Keating made a short-lived attempt to scrap negative gearing in 1985. Keating reversed his announcement within months and economists have been arguing ever since as to whether there were any clear patterns in that short period a long time ago.
But you don’t need to be a housing economist to put some of this week’s key data together and see the picture is bleak, even if higher rental yields might offer a silver lining for some investors.
* Clearance rates are in the mid-50 per cent range in both Sydney and Melbourne and that in turn only reflects the results the agents choose to submit to price data. In other words, it could be worse. What’s more we are used to something closer to 70 per cent.
* China-based buyers have backed away from the market. If a new report from KPMG in conjunction with the University of Sydney is anything to go by, it says that all China inward investment to Australia is down 36 per cent over the last year.
* And the International Monetary Fund in Washington now says the Australian residential market is worse than it thought and the situation is “delicate”.
You bet it is.
EY locks into Sydney base for next decade
In one of the largest leasing deals of this cycle, financial services firm EY has agreed to remain as anchor at 200 George Street in Sydney until the end of 2036.
Even with Bally’s bailout, Star’s condition is still critical
Star Entertainment chief executive Steve McCann’s big balancing act to save the struggling casino operator is not over yet. Not by a long shot.
How bad is the house price drop? NAB’S economics team has tackled the question head on and if you want a screaming headline it’s the worst since World War II. Which sounds pretty bad.