Lest We Forget

Over the weekend we've been dealt divergent stories on the Australian real estate market. One essentially misplaced from the daily horoscopes, Libra and Scorpio: buyers will be madly snapping up houses in Sydney over your birth months. The other regarding Queensland's dying property market and the resultant carnage ripping through real estate offices, with many agents now dead on the battlefield.

According to Andrew Carswell and Vikki Campion in the Daily Telegraph (yep, it took two minds to cobble this tale together)

MORE than 100,000 Sydneysiders are waking from winter hibernation ready for a spring home-buying spree that experts predict will jump-start Sydney's property market.

 Real estate agencies are anticipating a record flood of inquiries in coming weeks.

What follows is a series of quotes from agents, one more laughable than the next, based on their hunches and assumptions. The kind investment analysis you'd hear at the bar after four pots, is now passing for news in one of Australia's biggest newspapers.

The underlying message here? Fear. To scare the buyers: Believe all these people will come out of the woodwork and snap up a property before you do. And very scared agents: If you don't all come back, we're going the way of Queensland.

Where Ellen Lutton, of Fairfax, tells us:

Queensland real estate agents are struggling to make ends meet in the current property climate, slashing staff, costs and even closing their doors for good.

Normally I'd have sympathy, a lot of sympathy. Losing your job is horrible and finding your business in trouble even worse, but the real estate industry has long relied on a favourable run of bull dust press releases, full of unsubstantiated predictions to be turned into legitimate stories in newspapers, just like the Telegraph example.

The result? The most unsophisticated are duped into believing a maddening number of myths, chow down on monster debt and find themselves well and truly on the skids. As you can tell from the May 9, Sunday Telegraph.

MELINDA Mifsud is the face of the so-called Australian dream which is at risk of going sour as interest rate rises and falling property prices in Sydney's southwest force homebuyers into negative equity.

Ten months after buying a house and land package for $407,000, Ms Mifsud, 25, and her partner Stephen Holland have been hit by six consecutive interest rate rises. To make matters worse, the value of their Spring Farm home is falling.

Supermarket worker 21-year-old Danielle Simpson is going for a promotion at work to help her and her partner Lee Mansell, 24, repay the $315,000 home loan they took out with only their First Home Owner Grant of $14,000 as deposit.

Jean Evers, 52, and her husband Garry, 45, fear losing their home.
In January, only four months after they purchased their $415,000 new home on the edge of Narellan Vale with a 100 per cent loan and $24,000 First Home Owner Grant, Mr Evers was retrenched. Since they purchased their home, their repayments have risen by $400.

As Jean says, "...they lured us in with a false sense of security and then hit us with everything. I hate to think how many people have bought like we did."

And I hate to think how many others were dished 100% loans at the bottom of the interest rate cycle, but alas, unlike America, we have lending standards in Australia.

At least Jean can take comfort, she's not the only one doing it tough, Alan Guyder of Harcourts in Queensland can relate,  "It has actually helped us to re-think our strategy and given us a chance to re-think how we do things, cut costs."

Just like first home buyers who now share dog food casserole recipes.

Minor rumblings from the industry have called for another doubling of the real estate agent's body armour - the First Home Buyer's Grant. If the Queensland carnage spreads, those calls will only get louder and the next time around someone better ask the question - for the benefit of the agent or the buyer?