It’s a buyers’ property market: Gottliebsen

More cracks are appearing in the housing markets of our two resource states, Queensland and Western Australia.

More cracks are appearing in the housing markets of our two resource states, Queensland and Western Australia.

And last night I heard a stunning housing story from the US.

First, to Queensland. A reader contacted me and said that the number of dwellings sold in Queensland had dropped through the floor. I checked with RP Data and found that in 2007 the number of dwellings that were traded each month in Queensland was normally between 10,000 and 12,000.

In the first two months of 2008 sales were still within that range. Then in the period from March to the end of May the level slipped to around 8000 a month – a fall, but not a huge one given the good times that had been experienced.

Then in June and July the sales rate fell again – to around 6200 – down about 42% on a year ago.

The biggest fall was in units sold outside Brisbane, which were down 50%, reflecting the marked changes in the markets of the Gold and Sunshine coasts. But there was a 40% drop across the board.

There are clear signs that in August sales in Queensland have slipped a lot further, although the final figures are yet to come in. Such a dramatic fall over a short term has significant implications. The number of unsold dwellings in Queensland has jumped, and now totals 79,325.

There are only 50,806 dwellings for sale in Victoria. In WA the number of unsold dwellings has soared to 52,700 – even more than Victoria. The housing markets in WA and Queensland were boosted by the miners who had cash to buy a house and did not care how much they paid.

Now that there is a long queue of unsold houses on the market, sellers and real estate agents will be hoping that lower interest rates will drag in buyers.

There is no doubt lower interest rates stimulate buying, but the tighter rules on bank lending mean that buyers have less money to spend. Even the miner buyers can see tougher times and are more cautious.

Dwelling sellers are still asking for prices related to the old bank lending criteria. In time there will be an adjustment that lowers prices, but this can take a year or so to filter through and while that happens life for real estate agents is going to get very tough.

The sharp drop in volume will hit state budgets hard because stamp duty is a vital part of Queensland Government revenue. The Queensland state election is due in September 2009 – around 10 months away – and Anna Bligh is not faring well in the polls.

Last night I met a Canadian born landscaper (now living in Australia) who told me about his parents who have just paid $US200,000 for a house in Phoenix, Arizona, that would have been valued at between $US800,000 to $US900,000 just a couple of years ago. They can’t believe their good fortune because they can now afford to spend Canadian winters where it is warm.

Imagine what it feels like to see a house that you paid $US800,000 for selling for just $US200,000. It would shake the very foundation of your existence.

And remember your neighbours know that while their house might not be for sale, their net worth has suffered the same fate.

The US recession is going to last well into 2009. But if you were looking to buy a house, there has never been a better time.

This article first appeared on Business Spectator