There are many differences between the Australian, Britain and US property markets but these overseas markets can be terrific barometers for us.
In recent years, the overseas markets were devastated, with a slump in value, markets swamped with desperate sellers and innumerable foreclosures.
Those few buyers who were around found it difficult to get finance as credit and lending dried up. The picture was not good.Back here, despite some ups and downs, our housing market did not fare so badly. Rather than dry up altogether, buyers were fewer. This meant those homes that did sell realised little or no profit.
But we appear to have come through it.
Our big cities, where demand is high and supply constrained due to a lack of land, have had the most confident growth and sustainable prices.
Holiday markets, rural and regional areas — where demand is always more unpredictable and inconsistent — felt the pinch most.
I was in Britain recently which is now showing signs of having come through the worst of it. Interest rates are low but funding is still a challenge. Nevertheless, people are buying, selling and moving again. There are no record breaking prices — yet — but sales are being achieved at fair values.
Like here, much housing stock has not had substantial capital growth for five to seven years. It only seems terrible because growth levels in recent decades were high double digits. But let’s face it, we have to recognise that that is just not normal. The US is the housing market of extreme diversity. Houses can sell for $10,000 but you often find the tax you owe is almost half of that. And two years later, the value of the property has dropped to $7000 as high stock levels continue to push prices down.
Meanwhile, in New York demand is on the rise again and prices are pushing up. Likewise in San Francisco, where Silicon Valley salaries are again pushing up the prices of homes.
Away from the biggest cities, however, are places with high foreclosure rates and property prices in freefall. So the conclusion to draw out of all of this is that all three markets are behaving “normally”.
Regardless of whether you are in Australia, Britain or the US, there are high-demand areas and places that haven’t seen a value gain in half a decade.
Markets are driven by localised factors as well as macro-economic trends and this gives some context for why the market is behaving the way it is.
But in 2013 we do have something that was not always “normal” — the amount of information you can access to help decide on the health of any real estate market.
If you are a property nerd like me, sites such as realestate.com.au here and in Britain rightmove.co.uk are a treasure trove. In the US my favourite site is trulia.com, which provides the market for properties and the official valuation — often nowhere near the asking price.
I love pouring over these sites and seeing what’s on the market — it’s all good fun.
And that’s perfectly normal, isn’t it?
Article originally published Couriermail.com.au by Andrew Winter news.com.au 29/4/2013