The long overdue real estate correction is on its way, finally. 7.5 times average income for the average property was never sustainable, compared with 3-3.5 in the rest of the industrialised world.
Much pain, no gain in housing bust | The Australian
Prices had dropped furthest at the top end of the market, Nedlands agent Chris Shellabear said. “The better properties have dropped by 12.5 to 15 per cent,” he said. “Some other properties by 20 to 25 per cent. Some of the bigger percentage falls are occurring at the top end because they flew higher and longer than those in the other part of the market.”
“From the June quarter to the September quarter the turnover (in the western suburbs) has dropped 54 per cent,” Davies said. “And the September turnover is one-tenth of what it was normally over the last five years per quarter.
“And this quarter is worse. That’s the way it’s shaping up. I’ve been through this before, but in 40 years of real estate this is the worst I’ve ever seen it.”
This is in Perth, one of the hottest markets in the country, but prices are falling in other areas, it seems Melbourne's prices are getting a bit less illusionary.
Gnadenburg, the rental market may still be tight, but that's more than anything else a function of the inability of the government to release land in line with demand for housing, and because of the many inhibitors to provision of affordable rental housing like excessive council charges for development et al.