The newspapers and blogosphere has been alive with the news of the recent record price achieved for a property in Australia, with the sale of 43 Saunders Street, Mosman Park, for A$57.5 million.

I remember walking round the property a few years ago when it was first put on the market (for a rumoured $80mn) as we developed the individual property web site for the real estate agent, William Porteous. Everything about it was absolutely breathtaking - the views, the sheer physical size and presence, the tennis court, the multi layered levels and finishes throughout.

With the resource riches in this State, it might not be a surprise that at the very top end, WA more than holds its own and now claims the record for the most expensive property in the land.

What does this mean for the rest of us? Probably not much; some might decry the multi-squillion riches in the hands of the few, others might be proud that WA now holds the record; others might have minimal passing interest and a shrug of the shoulders for what has happened ... although I know that those involved in this sale put in the hours (years) and reaped the rewards, and to them, we say congratulations. Records are meant to be broken, and this is one amazing record.

OK - granted I'm no real estate expert, but what's going on in the current real estate market ... in Perth? in Australia?

In 2006 we witnessed a generational run up in property prices (46% growth across Perth metro), and a tightening of the market with record low numbers of properties available for sale. Anything that listed for sale sold in hours, agents has weekends off with nothing to 'open' and up, up, up went the prices. People said it couldn't last... and they were right (eventually), but prices went up another 16% in 2007.

In 2008, it all got rather nasty (I suppose it had to - the higher the rise, the harder the fall?). The property market  - certainly in the higher end of Perth - went dead. In some suburbs hardly a whisper of a sale went by, month after excruciating month. The world endured an unprecedented global financial crisis ("GFC"), which sorely affected those economies with relatively large financial sectors (UK, Iceland, USA); but in some ways, Australia - although experiencing a slower time of it - was isolated from the real nasties.

While this was going on (most of 2008 and early 2009), sellers either took their properties off the market or dropped their prices; and new sellers came in with more realistically-priced homes. Everyone started to realise that 2006 was over, it was a different market altogether.

As the world started to realise that maybe the worst of the GFC was over (all it took was enough people to think the worst was behind us and this feeling to spread), so confidence started returning to the market (sometime after March 2009) and with prices having adjusted downwards 20% or so, sales reappeared. Real estate agents pretty much sold all their remaining stock of properties during the 3 months of August - October 2009. The total number of listings fell and the market tightened again.

Which brings us to today, with (the 'other news' apart from ETS and the Libs) the Federal Reserve just having risen interest rates for the 3rd consecutive month (which is unprecedented by the way, the 2nd time I've used that word in this blog post... another record). Are we heading for another trip? A double dip recession? Did we get overly exuberant about the recovery? Do we need dampening down? Or are we going to learn from history and slowly rise out of the current market situation? Or are we OK?

What is happening? ...

In a sign of the times, and what must have been a difficult decision, REIWA (The Real Estate Institute of WA) has announced that today's Homebuyer magazine will be the last.

A fixture in the home buying scene for three decades, this full colour weekly glossy real estate magazine has fallen victim to the perpetual and inevitable shift of advertising dollars from print to online.

As REIWA President, Rob Druitt, noted "Closing the Homebuyer is like losing an old friend, but the reality is that more agents and most of the public are now using the internet to list properties for sale or to search for homes to buy."

aussiehome.com would like to salute the Homebuyer and REIWA (has any other Real Estate Institute published such a thing for such a sustained period of time?), and hold the publication with some affection (we get our copy sent to us every week). Some aussiehomers used the Homebuyer in the past to look for property, and some even advertised in it (those who had a former life as real estate agents).

Homebuyer, R.I.P. ...

In our last post, we argued how the evidence from our clients and our site pointed to the fact that the property market had already bottomed, probably in March 2009 (as we had noted, at the time).

Not everyone agreed, but as someone wise once said, 'at the bottom of the market there is no one around to ring the bell'. But, as things get better, people tend to notice, and if evidence convinces most of us that the worst is behind us, so this feeds more positive sentiment, which then becomes self fulfilling. 

More evidence is now pointing to a clear sign that property market improved in the June quarter of 2009.

Out of 273 suburbs across the Perth metro region, 71 saw their median (middle) price rise and 80 stayed the same. Put it another way, less than half fell, and the overall Perth median price remained the same at $430,000. In the previous (March) quarter, only 36 suburbs saw their median price rise, 53 stayed the same, and no less than 184 (68% of them) went down. Going back another three months, in December quarter 2008, 171 (63%) of suburbs fell across Perth metro.

As the market turned the corner from the March to the June quarter, so prices were still adjusting. In the March quarter 2009, 21 suburbs had a median price over a $1million. Three months later, 5 suburbs had dropped out of the $1million club. The top 16, as of June 2009, is shown in the table shown (together with the change in their position since March 2009).

Saying things are 'normal' does not make headline writers reach for their laptops, nor will it light up the blogosphere; but in fact we've not seen a 'normal market' for a while...

"If I was to categorise the market at the moment, " says Rob Druitt, (aussiehome.com client and Principal of Druitt & Shead 1st National based in Scarborough), " it would be that it's a normal market. There is interest out there from buyers but you have to work at it, prices are right and properties are selling. There's the 'right' amount of properties on the market for sale. The newspapers are only interested in 'booms' and 'slumps', but at the moment, I like it - it's normal ! "

Jonathan Keys from Brockway Keys Real Estate (another aussiehome.com client, based in Fremantle) agrees, " I'd say the market is normal; and for many agents who have only been around for 5 years or less, they've not seen it like this. I like it, you work hard, and the rewards are there for your effort. "

So, do we love the normality of things at the moment? Is this how it should be - calm, measured, properties selling, but not for crazy prices? People having time to look, consider, make an offer and get what they want. Enough choice and variety - good for everyone? Let's praise the market for being normal! Now, that would make a refreshing change... and is newsworthy.

(Photo Credit: Normal Theater, Normal, Illinois, USA, by Katie White Snow, Flickr.com) 

In the latest Economist Intelligence Unit report, Australian cities have fared pretty well, with 4 coming in the Top 11. The 'livable city' survey ranks according to health care, stability, culture and environment, education and infrastructure. Harare was the worst city, Vancouver the best. An index score compares the cities, with the maximum 100 being "ideal".

1. Vancouver (98.0)
2. Vienna (97.9)
3. Melbourne (97.5)
4. Toronto (97.2) 
5. Perth / Calgary (96.6)

Sydney came in 9th, and Adelaide 11th.

So is Melbourne better than Perth? (Dare we mention swine flu?) Perth better than Sydney? What do you reckon? aussiehome.com (being based in Perth) has a distinct passion for Perth, and can't understand why 4 cities are above it to be honest!

The latest sales data (released by REIWA) for the March quarter shows that most Perth suburbs (68% of them in fact) experienced a fall in median property prices in the past year, but not all. Peppermint Grove, already the richest neighbourhood in WA, saw its median price rise by an astounding 31% to the stratospheric heights of $5.1mn. This means the middle price deal in the year to March 2009 was $5.1mn. But, then again, there were only 9 sales during the period (highest sale $8mn).

Overall, 184 suburbs saw their median price fall in the year to Mar 09, 53 were unchanged, and 36 rose. The Perth median price fell 2.3% to $430,000, its 5th consecutiove drop since the top of the boom in December 2007 ($465,000).

Dalkeith, with its famous $22mn sale in Dec 2008, came in 2nd in most expensive suburbs list ($2.66mn), with Cottesloe 3rd ($1.8mn), City Beach ($1.65mn) and Applecross ($1.55mn) rounding off the Top 5. All 4 experienced falls in their median prices (of between 2% and 13%).

As prices fall, so some economists say, so demand rises, and in the last quarter we have seen increased activity - with nearly all suburbs experiencing more sales in the year to March 09, than in the year to the two previous quarters (although well off the activity witnessed in 2007/08). There were 23,530 sales in the year to Mar 09, a 13% rise. Average sales per suburb in the year to Mar 09 was 86, up from 76 last quarter and 81 the quarter before.

Evidence (although very general) seems to point to a levelling out of the prices and a pick-up in property market activity. Are (dare we say it) now... finally... reaching the bottom of this market cycle? Click here for CHARTS of 276 suburbs.

There are lies, damned lies and statistics, as the saying goes. In another chase for headlines, some of the main media took liberties with a recent RP Data report that showed that Cottesloe, along with several other Perth suburbs, had dropped out of the million dollar club. Cottesloe's median price had (apparently) 'dropped 23.5%' to $785,000.

What the?!

What many (but not all) failed to mention was the Cottlesloe result was for sales of units only, while the data for the other suburbs was for established houses. Comparing unit prices against established homes is certainly not comparing apples with apples, and, statistically, a cardinal sin when chasing headlines for effect.

For the record, Cottesloe's median price (for established homes) in Dec 08 was $2,012,500, and the Mar 09 quarter figures should be out soon (we doubt it will be less than $1mn - UPDATE - it was $1.8mn). To check out 274 WA suburbs and towns, and chart their median prices over 5 years, go to our newly revamped suburb charts.

One swallow does not make a summer, but Perth (and specifically the western suburbs) was abuzz with the $20mn sale this week of a Jutland Parade property in Dalkeith.

Picked up across all the major media, and as sold by aussiehome.com client William Porteous, this result seemed to clash with the prevailing talk about 'largest price slumps across the nation are in Perth', and 20%+ drops in prices across the western suburbs...

Interestingly though, the latest REIWA data showed a 2% increase in property prices in March quarter 2009, and anecdotal evidence from aussiehome.com real estate clients suggest some of them had their best months ever.

So what's going on? Is this the preverbial 'dead cat bounce', or the much heralded bottom of the market or just 'light at the end of the tunnel' showing through at last (and other such platitudes)?

click COMMENTS to have your say!

Last Tuesday saw the RBA cut a further 25 basis points (or 0.25%) from the central interest (cash) rate, bringing Aussie rates to a 49 year low of just 3%. Almost immediately, the main retail banks either took the cut for themselves (NAB) or only passed on a 0.1% cut.

With banks going bust overseas, being nationalised or amalgamated, is this evidence that our 'strong' banks (4 of the most secure 11 banks globally are our 4 Pillars) are protecting themselves? Fair enough? If the 'cost' of the global financial crisis ('GFC') is we don't get much of the rate cut, is that better than have our banks fall over?

Or is this just greedy banks taking what's rightfully ours?

Click Comments to have your say!