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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (28083)	3/14/2005 12:53:58 AM
From: MulhollandDrive	Read Replies (1) \| Respond to of 306849

sg.biz.yahoo.com Monday March 14, 9:06 AM INTERVIEW: Rate Hike Slugs Australian Housing Market By Malcolm Scott Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--The Reserve Bank of Australia has sent a chill through the nation's shaky housing market and could send it into deep freeze again if it decides on a second interest rate hike in coming months. ADVERTISEMENT After stabilizing in late 2004 and improving in early 2005, the percentage of successful sales at auction in Sydney and Melbourne has been trending down week by week as speculation of an interest rate hike firmed in late February and then as the blow was delivered on March 2. Just 42.3% of the 240 properties listed for sale in Sydney on March 12 were sold, compared with 51.8% on the Saturday prior to the RBA's quarter percent rate hike. In Melbourne, 53.1% of Saturday's 201 auctions resulted in a sale, compared with 62.8% two weeks ago, Australian Property Monitors data show. "It has just been down, down, down" since it became clear the Reserve Bank was intent on hiking interest rates, said Louis Christopher, head of research at APM. The number of properties listed for auction was also down in both cities Saturday, APM's data - the most up to date housing figures available - show. "It's too early to call how much the rate hike has impacted on prices, but if we keep having clearance rates in the low 40% range in Sydney, then that's usually an indicator that we could expect further price falls," Christopher said. If the Reserve Bank decides it's content to keep its cash rate at the current 5.50% - the highest level in four years - then Sydney house prices are likely to fall 2% to 3% in 2005, Christopher said. Prices in Brisbane will also weaken slightly, while prices in Melbourne, Adelaide and Perth will continue to rise modestly in 2005. If the central bank delivers another quarter percent interest rate increase in coming months, as widely expected by economists, that would knock the stuffing out of Sydney's housing market and send Australia-wide prices lower as well, Christopher warned. "If we have another rate hike on top of what we have already had, that's where we think the price falls could be larger...it could be up to minus 8% in Sydney for the 2005 calendar year. "Sydney home buyers have always tended to over-extend themselves, leaving them exposed to rate hikes," he said. Australian house prices fell between 5% and 7% in 2005, led by falls in Sydney and Melbourne, after the RBA increased its cash rate by a quarter of a percent in both November and December 2003. The Australian weighted average median house price was A$371,853 in the quarter ended Dec. 31, up 1.9% from A$364,803 in the previous quarter, the Real Estate Institute of Australia said last week. In Sydney, median house prices declined 0.7% to A$471,500 in the fourth quarter from the third quarter. When those numbers were released, REIA President Ian Wells said the March interest rate rise and the possibility of another rise soon will further slug prices this year. In its quarterly statements on monetary policy, the Reserve Bank of Australia cites both Australian Property Monitors and the REIA's numbers in its comments on the health of the housing market. -------------------------------------------------------------------------------- Copyright © 2005Dow Jones & Company Inc. All rights reserved.