Home values of Australia's richest homes falling twice as fast as poorest

Best Asia Real Estate Editor's Comments: Last year on this blog in my newsletters and seminars I predicted a major selloff in real estate in Australia. Especially in Melbourne, Sydney and Brisbane.

Everybody thought I was crazy. After seven years of exponential growth how could prices drop?

 It's quite simple when prices get to the point where they don't make sense and few can afford  them they will drop in any real estate market anywhere is in the world.

When you add to that the fact that the Australian government began to push back on investment from foreigners such as the Chinese and you lose your external demand Any real estate market anywhere is in the world is doomed to collapse.

How much will prices drop?

The question is how much will prices drop? The answer is nobody knows but I will speculate that high-end properties, over 1 million, will drop as much as 30 to 50% before it's over.

Grass is greener:

In the meantime my predictions of a turnaround in Bali after its first downturn in modern history beginning in 2014 have happened.

In just the last few weeks villas that hadn't sold for four years are selling.

A high-end 2.5 million home sold which had not been sold for four years. 

Tourist demand and now a new demand from Chinese, the same people who bought Singapore and Australia is happening now.


Add to that a brand-new demand from potential 750 million baby boomers who live within a 6 1/2 hour flight from Bali for retirement homes and villas and you have the ingredients for what I've call :"the second best Time to buy Bali real estate this century". 

I've literally been 100% correct on real estate markets around the world for the last 30 years. No reason why I should be wrong this time.



If you've been watching my blog for a long time and you know that I'm right.

Don't wait. Go to your computer login on our website with  over 200 of the latest low-priced properties that are for sale substantially below 2014 prices. 

The next few days we will publish a brand-new website for Bali Luxury Retirement Villas with two-bedroom luxury villas with private pool selling for as little as $200,000 for an 80 year lease.


You can sit on the sidelines and watch Your Australian property drop in value or you can get out now and invest in greener pastures.









Some of Australia's most expensive real estate, in Point Piper, could have fallen in value by millions. Paul Jones by Duncan Hughes

Multimillion-dollar property values in the nation's glitziest postcodes are falling twice as fast as low-end housing, analysis by investment bank Morgan Stanley shows.

The nation's richest real estate has been sliding at an annual rate of about 8 per cent, compared to 4 per cent for properties in the bottom, or fourth quartile, its analysis shows.

That means property prices in Point Piper, home of the former prime minister Malcolm Turnbull where the median price is $15 million, could be falling by about $1.2 million a year, or $23,000 a week.

Rising interest rates, political uncertainty, stagnant incomes and increasing investor nervousness about the opposition Labor Party's proposed changes to negative gearing are contributing to a sharp downturn in lower priced property too, it shows.



Daniel Blake, equity strategist, said there is no evidence of any economic, policy or banking changes that might stop the fall in property prices and loan approvals. Regulatory changes are considered a further headwind.


"Given the subdued outlook for credit demand and supply, the still elevated level of prices and indebted households, it looks unlikely that the market will trough in the immediate future," the bank's report concludes, adding the underlying weakness is "entrenched".

Property prices in Sydney fell by about 5.6 per cent in the year to August, Melbourne's fall accelerated and even former hotspots, like Hobart, are slipping, according to a report published by CoreLogic earlier this week.
Weaker investor demand

Perth's quarterly pace of decline worsened to 1.9 per cent from 1.5 per cent. Brisbane values slipped 0.2 per cent after ticking up 0.1 per cent a month earlier, the report shows.

Morgan Stanley's analysis shows that Melbourne's property prices have fallen by 7.6 per cent in the past three months, the nation's highest. Sydney's fell by 7.2 per cent.

The bank's six criteria for assessing market outlook are all negative, including credit supply, rental conditions, mortgage serviceability and credit supply.

The overall situation has deteriorated since April when it warned conditions in the residential market were the worst in 30 years, which is when Bob Hawke was prime minister and the median property price for a Sydney house was $141,000.

Investor demand, weakened by tighter credit supply and weaker price and rental outlooks, is driving the downturn.

The value of new investor lending is 18 per cent below its level a year ago and the stock of debt is growing around 1.5 per cent year-on-year, the slowest pace on record.

Owner-occupier sentiment is "more robust, so far", with credit growth slowing to 7.6 per cent and the number of people who think it is a good time to buy rising in Melbourne and Sydney.

But that could be influenced by recent variable rate rises by Westpac and Suncorp, with the expectation that others are likely to follow.

House prices fell another four basis points in August to be down nearly 3 per cent for the year, according to the bank.