When will the real estate market crash?
In October, I wrote a piece entitled When will housing prices crash?
I speculated that the global slowdown in the housing market would be short-lived.
Since then, a series of events has confirmed my theory.
I wrote that housing prices were not only under pressure, but were headed for a crash, if not sooner.
In October, the first report came out from the United States government, showing that the real average price of a house in the United State was now over $1 million.
This was the first time that this had happened since 2007, which was the peak year of the housing bubble.
The real average home price in the US was around $2 million at the beginning of the year.
But in the first five months of the new year, it went up by $3 million.
Then, in November, the US government released a new report that showed the real price of houses in California and New York had fallen by $4 million and $5 million respectively.
This was also the first such decline for a major US market.
But in January, the real median house price in California dropped by $10 million and the median house in New York dropped by a whopping $50 million.
In other words, the median home price had gone up $1,600 and $1 to $1.8 million.
I had hoped for an acceleration of the market, but the data didn’t seem to support that.
Finally, in March, the Fed announced that its asset purchases were to stop, with a focus on “financial stability”.
So what has happened since?
In the first three months of 2018, the United Kingdom’s housing market crashed.
Since then, we have seen a global slowdown.
The eurozone has been in a recession, and in the third quarter of 2018 its economy contracted for the first of two consecutive quarters.
Meanwhile, in the rest of the world, the Australian housing market has been under pressure for almost two years.
In July 2018, a report from Nomura, the financial services firm, warned that the Australian property market was on track for another recession, with median house prices expected to fall by $20 million in the next six months.
What is the impact of these global developments?
There are two main things that have happened in the past two years to affect the Australian market.
First, the global downturn has led to a fall in the price of real estate in Australia.
Second, there have been a number of major price drops, such as in Sydney, Melbourne and Brisbane.
How did this happen?
The first major price drop occurred in Sydney.
Real estate prices have been falling across the country, but not in the same way as in the UK.
Instead, prices in Sydney have dropped by over 25 per cent since the beginning the year, with the median price of the most expensive home going from $2.7 million to $2,700.
When the median Sydney house price went from $1m to $800,000 in the last year, the average price fell by over 30 per cent.
Secondly, in January 2018, property markets in California, New York and Texas were in a similar situation.
These markets had been experiencing a major slowdown in house prices and the first signs of a crash were beginning to appear.
On February 14, the Real Estate Institute of America released a report saying that the market in California had been “slightly out of whack” for the last two years and that it would take “several years” to recover.
And finally, in February 2018, when I wrote my article in October, Australia was still recovering from the first major drop in house price, when prices in Melbourne and Sydney had both fallen by 25 per to 30 per per cent over the previous year.
Are the Australian markets recovering?
I don’t think so.
First, the report released by Nomura pointed out that the first wave of price drops in Sydney were not in a bubble.
The first wave was a correction caused by a downturn in property prices in China, which is what the UK and the US were experiencing at the same time.
Moreover, as the housing markets recovered from the initial wave, the housing price bubble in Australia has burst.
The average house price there has fallen by over 50 per cent in the three years to date.
As for the US, the second wave of property price drops started in late 2017, when the first recession in 20 years began.
The US is now experiencing the longest slump in house values in history, and the second recession has already ended.
While the global economic slowdown has brought about the first drop in home prices, it is not the only factor to blame for the recent price downturn in Australia, as it is true in the world’s largest economy.
Why is the Australian economy in trouble?
One of the biggest factors in the decline in