After hosting the 2000 summer Olympics, Sydney Australia has seen some astounding losses on real estate speculation. The outer suburbs are seeing median price drops between $100 to $450 per week since early 2004. In Sydney property prices peaked three years after they hosted the games, will Vancouver’s market hold on that long?
One of the obvious differences between Vancouver and Sydney (asides from the summer / winter games hosting) is that their games took place at the beginning of a global credit boom, whereas ours seem to be happening at a time of contracting credit. This will likely have an effect on when our local market peaks.
The MVS Valuers analysis shows that anyone who has bought as long ago as January 2002 and resold recently in Sydney’s west and south west is likely to have copped a loss.
Prime Minister Kevin Rudd is today expected to unveil a plan to help families battling housing stress in a move designed to take the heat out of the latest Reserve Bank rate hike. Last month, on the day before the central bank increased rates to an 11-year high of 7 per cent, Mr Rudd announced the government’s $850 million first-home saver accounts scheme.
Mr Rudd’s announcement comes after new research shows 1.1 million low to middle income households are now spending more than 30 per cent of their income on housing. To present an accurate picture, anomalies such as upgraded homes, sales within families and vacant blocks that have been built on were removed from the analysis.
Among some of the worst losses studied, a home in New Cambridge St, Fairfield West bought for $780,000 in November 2004 sold in July last year for $415,000, a loss of 46.8 per cent.
At Bond Place, Oxley Park, a unit bought for $455,000 in August 2005 sold last May for $250,000.
At McAndrew Close, Lurnea, a house bought for $420,000 in December, 2004 sold last June for $267,000.
On average houses actually bought over the past five years and then resold have resulted in losses of $20,912 in Sydney’s west and $20,435 in the south west for their owners. MVS Valuers director Peter Raptis said there was little likelihood of a recovery in prices in the short term. He predicted more possible losses ahead, or at best nominal growth.
The full article can be found on news.com.au
There are some areas of eastern Sydney that are still booming, so this slump has not hit their entire market equally. There are some interesting comments on that article as well.
Thanks to Visio for the link.
update: a more positive interpretation from 2006 can be found here