The difference between the UK and Australia is that the GBP has dropped by 20 to 30% against major currencies, while the AUD has climbed by about the same amount, which makes the absolute value of Australian property staggering over valued.
Anyway, focusing back on the UK:
Sept. 27 (Bloomberg) -- U.K. home values dropped by the most in 18 months in September as all of Britain’s regions posted price declines, Hometrack Ltd. said.What a surprise!!
The average cost of a home fell 0.4 percent from the previous month to 157,600 pounds ($249,000), the London-based property researcher said in an e-mailed statement today. That was the third consecutive monthly drop and the biggest since March 2009. Housing demand fell the most since January 2009.
The report adds to mounting evidence that the housing market is weakening as the U.K. government prepares the biggest budget squeeze since World War II and banks curb lending. Bank of England Chief Economist Spencer Dale said last week that values may fall further after the small size of declines during the recession surprised people.
September’s price declines are “part of an ongoing re- pricing process which began six months ago in early spring, and which is set to stretch well into 2011,” Richard Donnell, Hometrack’s director of research, said in the statement. “Growing concerns over the economic outlook and public-spending cuts are weighing heavily on would-be purchasers.”It's a very well known economic fact: increasing supply helps rise the prices... We are not in wonderland anymore, we are playing Dumb & Dumber.
Prices fell in all regions for the first time since April 2009. The decline in demand has been strongest in southern England, which experienced the largest price drops in the last three months. Prices fell 1.1 percent in London and 1 percent in southeast England in that time, Hometrack said.
A surge in the supply of homes for sale should slow and help limit price declines in the next year, Hometrack said.
[...] Mortgage approvals fell to a 16-month low in August, the British Bankers’ Association said on Sept. 23.I agree with Dale that it's amazing how denial and property mania are strong the UK, even when the financial sector and the builders collapsed. But we also have to take into account the substantial drop in the value of the pound, which masks the real depreciation of the value of properties.
“Clearly, house prices have fallen, but I think most people have been surprised by how little house prices have fallen over this period,” Dale said on Sept. 22. “House prices have fallen 10 percent or so in this period,” he said. “It could be that we haven’t seen it all and that more is still to come.”
Hometrack’s index is based on a survey of more than 5,100 real-estate agents and surveyors.More on the UK in the next few days, as I have a lot of data that I haven't had a chance to post about yet...