A lot has been made recently of this article in the australian press reporting on a house in Sydney selling for 42 percent less than it sold for three years ago. Housing market bears are quick to point to this article as evidence that “yes, actually real estate prices DO go down, sometimes drastically”, while people more bullish on the Vancouver market point to the fact that “this is only one house out of many and the real decline in house values overall has been closer to 15 percent or so, besides vancouver is different because the olympics are coming and I’ll sell just before the crash anyways”.
But I say you’re BOTH wrong, and you’re not looking at the big picture. You’re forgetting one very important fact, and that is that Syndey Australia is on the other side of the world from us. This point is illustrated above and is the cause of a common but major misunderstanding regarding australian housing market data. First off lets look at a graph of that house price:
Looks bad doesn’t it? You might look at that price drop and get a bit freaked out about the possibility of prices dropping in Vancouver just after you buy that shiny new $400k condo right? But that feeling is caused by one common amateur mistake- you are failing to make hemispere adjustments to that data. Australia is on the other side of the earth, which is why we refer to it as ‘down under’. Before you attempt to interpret any Australian real estate market data you need to make one major adjustment, like this:
There! That looks a lot better doesn’t it? Look at that rise- It’s bold, steady and strong. Just like the Vancouver market!