The credit crisis (which should be called a debt crisis) is hitting the news in a big way here in Australia again. People are tending to think that the crunch has “hit” already last week or perhaps that this is the “second hit”. However, I get the feeling that we are all on the beach watching the tide go way out. Perhaps we come across a few insolvent US investment banks in the wet sand. Don’t just sit there! Get off the beach and head inland at pace!
What does this mean for Brisbane property prices? I can only imagine that the recent news will at least give buyers pause. A sustained pause would be enough to melt away a few percentage points. I’ve seen recent commentary which puts the bottom of the market ahead in 2010. I figure that’s a little optimistic and that the property market slump will be somewhat more sustained than that – say bottom in 2012.
News.com.au reports that auction clearance rates have plummeted across the nation. Brisbane has fallen to 23% from 48% last year. The direction of auction clearance rates is a well-known leading indicator for property prices.
Domain.com.au’s article “Property crash not likely” only helps convince me that the bust is already on the way :). ABC’s MediaWatch have reported that the “rental crisis” may not be as bad as all that. Domain’s article does say there’s a “tight rental market” particularly in Brisbane (but it’s Sydney where we have seen all the footage on TV!). It seems however that this is the real estate agents pushing this line in the news. Trying to make the last few easy dollars out of bubble. They say that increasing rents would lead to investors gaining interest again however the rental yields would still be below average even if rents go up 50% over the next 2-3 years! And once the “full employment” myth is blown away that will have it’s affect on confidence along with making future immigrants reconsider their options ;).