Thursday, June 16, 2011

Australia's Expensive Suburbs Plummeting

Mosman Park WA -43%
Hunters Hill NSW -31%
East Fremantle WA -30%
Adelaide SA -29%
Melbourne VIC -28%

Median house prices plummet in high-end suburbs
Perth's Mossman Park, crowned Australia’s most expensive suburb last year, now lays claim to the title of hardest hit by the property gloom.
Real estate losses dragged the suburb's median house price down by 43.1 per cent to $1.25 million.
Sydney's upmarket Hunters Hill, which has a mean taxable income of $125,000 a year, suffered a similar fate, with median home prices falling 31.1 per cent to $1.41 million.
Wait wait wait . . . if these are all two income households, that's a median income of $250,000. That's still a median multiple of 5.6x (down from 8x). To reach a more reasonable 3x the price will have to fall to 750,000, another 50%, which is unlikely. Luxury areas tend to have elevated multiples due to the smaller market and highly individual valuations.

"The premium sector is being impacted by a perfect storm of forces such as consumer conservatism, higher interest rates, poorly performing equities markets, unstable global economic conditions and lower levels of business and consumer confidence," he said.
AKA, sentiment shifted. The importance of buying at fundamentals is really clear at this stage in the market. If you only buy at fundamental levels you are far more immune to sentiment.

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