Housing crash puts sellers in debt crisis: "A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.

"Only one person bid on the house in the city's west. The mortgagee sale was forced after the owners could not meet the interest payments on the $405,000 they borrowed to buy the house at the peak of the market.

"Auction clearance rates are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth. The Herald checked 16 properties in south-western and western suburbs listed at the weekend and found 60 per cent had prices or had attracted offers at a discount to their last sale price."

"Increasing petrol prices appear to be compounding the impact of repeated interest rate rises on properties in Sydney's outlying suburbs by driving prices down. Lethbridge Park, near Penrith, recorded the second highest fall, when a townhouse that sold for $257,000 in 2003 was resold by mortgagees for $156,500, reflecting a roughly 40 per cent fall.

"At Heckenberg, a four-bedroom house that sold for $330,000 in 2003 resold at $255,000 in another mortgagee sale. Four of the seven registered buyers put in bids before the Adaminaby Street house sold at an approximate 22 per cent discount to the property-boom price. "There are some people around Liverpool who think that prices have further to fall, but I couldn't imagine this type of house will fetch less in six months' time," said its selling agent, Ray Dimarco."

"At Parramatta, mortagees accepted $541,500 for an unrenovated house that fetched $736,000 in 2003 when it was sold as a deceased estate. The bank lent $580,000 on its 2003 sale. Even the inner-suburban areas are showing signs of depressed prices. In Lilyfield a four-bedroom house on 607 square metres last sold at $1,355,000 unrenovated in boom-time 2003 It attracted a $1,179,000 top bid after its recent renovation by its owner-builder. Two registered bidders competed at the on-site auction but the property was passed in well short of the owner's expectations. The freestanding house now has a $1.35 million asking price.

"Given it has been 16 years since the last recession, long-time estate agents fear the fate of a generation of owners who had not experienced having a loan when times were tough. Mr Beatty said: "There was a wave of people punting on the expectation of constant price rises until well into 2004, even after the three interest rate rises of late 2003. There has been significant price deflation and many now have negative equity in their homes.

""There are some sad stories. But we have to show the sellers the comparable sales and say honestly this is where the market is realistically at.""

Its begun. That's a crash, not a downturn. No one is going to sell in this market, except those that are forced. The peak of land values has come a couple of years too early according to the Georg/Hoyt/Harrison 18-year cycle, but it looks very much like a classic land boom and bust, of the kind we've been having in Australia since 1836.

Housing crash puts sellers in debt crisis: "A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.

"Only one person bid on the house in the city's west. The mortgagee sale was forced after the owners could not meet the interest payments on the $405,000 they borrowed to buy the house at the peak of the market.

"Auction clearance rates are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth. The Herald checked 16 properties in south-western and western suburbs listed at the weekend and found 60 per cent had prices or had attracted offers at a discount to their last sale price."

"Increasing petrol prices appear to be compounding the impact of repeated interest rate rises on properties in Sydney's outlying suburbs by driving prices down. Lethbridge Park, near Penrith, recorded the second highest fall, when a townhouse that sold for $257,000 in 2003 was resold by mortgagees for $156,500, reflecting a roughly 40 per cent fall.

"At Heckenberg, a four-bedroom house that sold for $330,000 in 2003 resold at $255,000 in another mortgagee sale. Four of the seven registered buyers put in bids before the Adaminaby Street house sold at an approximate 22 per cent discount to the property-boom price. "There are some people around Liverpool who think that prices have further to fall, but I couldn't imagine this type of house will fetch less in six months' time," said its selling agent, Ray Dimarco."

"At Parramatta, mortagees accepted $541,500 for an unrenovated house that fetched $736,000 in 2003 when it was sold as a deceased estate. The bank lent $580,000 on its 2003 sale. Even the inner-suburban areas are showing signs of depressed prices. In Lilyfield a four-bedroom house on 607 square metres last sold at $1,355,000 unrenovated in boom-time 2003 It attracted a $1,179,000 top bid after its recent renovation by its owner-builder. Two registered bidders competed at the on-site auction but the property was passed in well short of the owner's expectations. The freestanding house now has a $1.35 million asking price.

"Given it has been 16 years since the last recession, long-time estate agents fear the fate of a generation of owners who had not experienced having a loan when times were tough. Mr Beatty said: "There was a wave of people punting on the expectation of constant price rises until well into 2004, even after the three interest rate rises of late 2003. There has been significant price deflation and many now have negative equity in their homes.

""There are some sad stories. But we have to show the sellers the comparable sales and say honestly this is where the market is realistically at.""

Its begun. That's a crash, not a downturn. No one is going to sell in this market, except those that are forced. The peak of land values has come a couple of years too early according to the Georg/Hoyt/Harrison 18-year cycle, but it looks very much like a classic land boom and bust, of the kind we've been having in Australia since 1836.