Monday, December 06, 2004

House market bubble bursts - (Australia)

KIM BARTLEY, Daily Liberal

The 105 houses open for inspection in Dubbo at the weekend was a heads-up that times have changed on the local real estate scene.

Twelve to 18 months ago only half that number were lined up for sale as the city was gripped by that rare and expensive phenomena called a "boom".

Plenty of wannabe home owners dived for cover as prices soared by as much as 30 per cent and property transfers went through the roof.

'For sale' signs were going up and down faster than neighbours could blink.

Dubbo was caught in the slipstream of the frenetic Sydney market with local and out-of-town investors pumping air into a property bubble that had to burst. And it has.

NSW Real Estate Institute (REI) figures for the September quarter show the median house price up, but sales well down in the north-west sector of NSW taking in Dubbo and 13 other communities including Brewarrina, Coolah, Cobar, Mudgee and Wellington.

For three months from July the median price rose 6.45 per cent to $165,000.

But the sector's 288 sales in the third quarter of 2004 evidenced a downturn of 33.02 per cent on the previous three months.

The trends are largely reflected throughout regional NSW, according to the REI, whose Dubbo representative Bob Berry's best guess is that the current median house price in Dubbo is "probably over $200,000".

"In August 2004 it was $197,000," Mr Berry said when asked to comment on the new round of figures.

The realtor studied the figures before delivering the welcome news for Dubbo's hopeful buyers of the return to "a normal market".

"Price rises have abated and there is more choice," he said.

Mr Berry explained that the increase in the median price in Dubbo indicated strong and ongoing demand in the under $250,000 bracket, despite the "slower" movement of properties in the higher range.

In the year ending September 2004 the average median house price in the north-west rose 3.13 per cent, less than half of the State average of 6.5 per cent.

Investment had not dried up because housing remained "very affordable".

Mr Berry said the boom that hit Dubbo in early 2002 had been doomed by the Reserve Bank when it imposed interest rate rises in late 2003.

"They (booms) happen once every 30 years or so," he said.

"When they're over there are still homes, there are still buyers, life goes on."

He believes Dubbo will cope with the "new alignment" for reasons including a strong and resilient local economy and job security.

Sections of Sydney and Melbourne are reported to be hurting as their price slides gain momentum and spread to other capital cities, particularly Brisbane.

The volume of sales in Sydney for the September quarter, Mr Berry said, fell 22 per cent.

He's not anticipating a dramatic turn of events in Dubbo and when the Christmas real estate lull concludes in mid-January, the agent expects to see some new faces among open house inspectors.

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