Yesterday morning, when scrolling through The Edge’s daily electronic newspaper, I came across a layout that left me feeling slightly amused and bemused at the same time. On the same page, split into two columns, were printed two very contrasting reports of property prices in Australia and China respectively.

Screen Shot The Edge

Screenshot of The Edge Financial Daily, pg 7, June 2, 2015.

Australia home prices fall 0.9% last month
The one on the left reported that the prices of homes across Australia’s cities took a dive for the first time in six months in May, dropping 0.9% compared to a rise of 0.8% a month earlier in April. When you think about it, that just sort of makes it even with March, which doesn’t seem like much of a fall at all. In fact, according to a report by Domain, the drop in Australia’s property prices are likely to be short lived and merely an ‘adjustment’ due to a strong period of growth, which saw property prices in Sydney jump 15% over the past 12 months.

China new home prices increase in May
Further north in China, new home prices showed an increase in May for the first time in the past four months, an effect of Beijing’s loosening politics to boost the market. Home sales in May rose 14.7% compared to April, and 37.4% from a year earlier. Cuts in bank interest rates, easing mortgage policies, and new supply are factors contributing to improved buyer sentiment and new home transactions, according to a report by the China Index Academy. Prices had been falling since February, in addition to eight straight months of declines before a slight increase in January. Property prices in China have slowed down with its economy during the past year.

Considering that home prices in Sydney have risen almost 40% since 2012, and that the average price of new houses in Shanghai can cost up to 31,000 yuan per square meter, I think it can be safely concluded that property prices around the world may be on a roller coaster ride, but with a lot more uphill climbs than downhill slides, and those ‘slides’ are just precursors to steeper uphill rides than before.

Sources
The Edge Financial Daily (June 2, 2015)
Domain Australia (link)
Reuters (link)
Shanghai Daily (link)