On a timeline basis, Australia is about where the US was in 2006, essentially a state of denial.
Developers are offering massive incentives such as cars, furniture, and vacations to move homes while chanting the ever-popular "now is a great time to buy a house" mantra.
Gifts Galore
The Age reports Gifts galore boost flagging unit sales
Developers are slashing apartment prices and handing out tens of thousands of dollars in incentives - including rebates, cars, furniture and holidays - to lure buyers into Melbourne's new-unit market.No Auction Bidders
While many industry players say the offers are good news for buyers, others worry that the discounting could fuel a "race to the bottom" that could harm property values.
"There's no question there are a lot of apartments under construction, so everyone's trying to attract attention to get people to inquire about theirs," said Robert Pradolin, general manager at developer Australand.
"It's probably a very good time to buy because there are a lot of incentives around, but buyers still need to be really careful that they are picking a place based on its location, quality and who the developer is."
In one case, Maxx Apartments announced a "massive St Kilda apartments sale" in a series of large advertisements. The promotion saw $121,000 cut from the cost of a two-bedroom flat and the price of a $415,000 one-bedroom unit reduced by 18 per cent.
Late last year, a $65,000 Mercedes was offered to the first buyer of one of four luxury apartments that remained unsold in a Brighton development. Rubicon Pacific used the teaser despite already dropping prices by $150,000 to $200,000 on apartments first listed at up to $1.3 million.
Other developers have followed suit, launching campaigns that provided $5000 to $20,000 rebates on top of the $13,000 available to first home buyers before July 1. Some have tried to lure investors with offers of guaranteed rental income for up to five years.
Agency Castran Gilbert said the offer of a holiday for two to Palm Cove for buyers in the Brunswick West development Portez led to a 50 per cent spike in inquiries.
Similar to the US condo bust in which bidders vanished overnight, The Age notes Empty auctions: 'op shop' listings
What if you put your house up for auction but nobody turned up? Not even the neighbours for a stickybeak?This is how downturns major start: price wars, incentives, and still no bidders. Given that it's only 2006, Australia has a long way to the bottom.
Well, that happened at the weekend, with agents from Hocking Stuart and Buxton real estate left standing alone in the pouring rain.
Auctioneers put their hammers away for two houses in Elwood, with the owners deciding to cancel at the last minute due to no interest at all. In all, eight auctions were put off.
Inner west agent Craig Stephens, managing director Jas H Stephens, said it was "rare to have no one rock up" to an auction, but he has noticed an increasing number of buyers waiting to negotiate after auction.
"It's definitely a buyers market at the moment and those buyers are being a bit fickle," he said. "But good houses in good streets still sell and some property is being sold one or two weeks after auction."
He said many vendors were holding off, with a pick up in listings for auctions in late September and early October. "It looks as though there could be a pick up in supply in the second half of the year," he said.
Hocking Stuart agent David Sullivan said the owner of its property that had zero attendees did not want to comment. Buxton did not return calls.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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