Housing market’s big secret
AUSTRALIA'S real estate markets are changing extremely fast. Sydney just posted its biggest annual price fall since 1990, sinking 7.4 per cent. If Australian real estate was a movie, we are at a crucial point in the plot. But this movie is really hard to watch.
If you go on the real estate websites, instead of prices, you keep seeing the words "price withheld" and "contact agent". It is pretty easy to find out what prices were in 2017. But finding out what is happening now? Hard.
Let's start in my own suburb of Clifton Hill. (Clifton Hill is in Melbourne, where prices are down 4.7 per cent over the past year.) A house around the corner from me sold the other day. I wanted to know how much for. But when the sale showed up online, no price was listed. It said "price withheld".
How common is this? I found myself wondering.
I checked out the last 200 sales in Clifton Hill and discovered that fresh information can be hard to get. This next graph shows recent sales in Clifton Hill, broken into groups of 25. It depicts how many real estate listings show prices after they are sold, and how many do not show the price.
Of the most recent 25 sales, over half have no price listed on realestate.com.au.
Is this to cover up a falling market? That was my first suspicion. I rang realestate.com.au to see what they could tell me.
They said no. The data comes in from the valuer-general slowly, media manager Phil Mahoney told me. Some freshly sold places will have prices withheld, but the official data comes in eventually. There was no trend to withholding prices, he said.
I checked with another local agent, John Karr from Jellis Craig, and he told me that actually it is high prices that agents sometimes like to keep quiet - to avoid being accused of underquoting.
"In a rising market, some agents when they got a really good price, on the one hand they wanted to brag about it," Karr said. "But they didn't want (people to think) hey, did they underquote it."
I believe those guys when they say there is no trend to withholding prices.
But it is certainly interesting that in the city where prices are falling fastest (Sydney, down 7.4 per cent over the year), so many prices are withheld. As this next chart shows, of the last 25 properties sold in Bondi the price of 20 was not disclosed.
Not every property market is falling like Sydney. Hobart is Australia's fastest growing property market, up 9.7 per cent in the last year. In West Hobart, most people are disclosing their prices.
There are many differences between Bondi and West Hobart, their residents, the dwellings and the real estate agents that operate in each, so it would be wrong to conclude the only possible explanation for the difference is that Sydney's market is tanking while Hobart's is booming. But it sure is an interesting pattern.
In Glenelg, a suburb of Adelaide (prices in Adelaide are up 1.8 per cent over the least year) prices are mostly disclosed online.
Kangaroo Point in Brisbane, where prices are up a meagre 0.3 per cent over the year, shows a narrow majority of properties revealing their sold prices online.
But all in all, across Australia, good fresh information on sales near you can be hard to get. That makes life very tough for anyone trying to buy or sell property, and at this time of year, that is a lot of people
Maybe the mystery is part of why we are so obsessed with real estate. Our preference for auctions, especially in Melbourne and Sydney, can really add to the confusion. In most of the world, houses simply have an asking price. But at an auction, something can sell far above its advertised price.
Australian real estate is a tough market to understand at the best of times, and when it is moving rapidly - either up or down - things can be even tougher.
Jason Murphy is an economist. He writes the blog Thomas the Think Engine