The Housing Market: Is it going up, down, sideways, booming or even crashing? It all depends on who you believe on any particular day. On Saturday June 27 a house in Brunswick, a not particularly prestigious inner suburb of Melbourne, sold for nearly a million dollars over the reserve price. The Age reported: "In Brunswick, a crowd of about 400 watched, stunned as the sale price of 10 Charles Street soared 61 per cent - or nearly $1 million - over its reserve".

Intense competition between four bidders saw the 1,525m2 block sell for $2.58 million against a reserve of $1.6 million. The results column denotes 'WB - 5 rm' or weatherboard five main rooms; so maybe the developers were after the land. But even then that would have to go up to get enough units to amortise that sort of expenditure. Or is someone going to build a mansion? In Brunswick?

If the crowd was stunned imagine the owners! That would be the excuse for the mother of all parties.

Too much too fast
The Real Estate Institute of Victoria reported that the week's clearance rate was 86 per cent for 425 auctions, the second highest level on record, fuelling speculation that the market could be heating up too much too fast. The auction above, whilst the most spectacular result, was certainly not the only result well above reserve with 24 per cent and 18 per cent "aboves" being recorded.

All of this came to my attention was when staying with my daughter in inner Melbourne. She and hubby came back with the Sunday papers and looking at real estate, were suitably horrified at the results. I mean if you can't get a good buy in the middle of the worst economic times since the Great Depression, when can you?

Curious and to get a more balanced view, I had a look at the RP Data results (a very good site) and found that Melbourne is not the only city selling houses at a fast clip - see stats below:

City   Clearance Rate
Adelaide - 70.3%
Brisbane - 43.1%
Canberra - 83.3%
Melbourne - 80.5%
Perth - 33.3%
Sydney - 69.6%
Tasmania - 4.5%

Canberra, nearly recession proof and with a limited availability where everything sells at auction, tops the clearance rates. Conversely, Tasmania where the market has been escalated in recent years by mainlanders with discretionary spending capacity or those sea-changing after selling Sydney or Melbourne properties at bloated prices fared worse as economic reality bites.

Brisbane and Perth are standouts as reflective of the mineral resources crash and meanwhile the big two, Sydney and Melbourne, representing 60 per cent plus of the capital city populations continue to sell property regardless. Add to this the momentum generated by the first home buyers' and/or builders' grants and we have a market that is in stark contrast to that of the big worry - the good ole US of A.

Prices have fallen recently - Brisbane down 7 per cent for the financial year, Adelaide 3 per cent, Melbourne 6 per cent, but this is minor compared to falls in values in the US of up to 30 per cent. Research house BIS Shrapnel has just released a report in which they predict houses in the major centres will increase over the next three years by Sydney/ Melbourne/ Adelaide - 19 per cent; Canberra 17 per cent, Brisbane 16 per cent, Hobart 15 per cent, Perth 12 per cent, Darwin11 per cent. Such a bold forecast is predicated on the boost from the first home buyers grant and low interest rates. They caution that prices will remain relatively stagnant until unemployment peaks around June 2010.

Ridiculous
An article on these forecasts on news.com.au created considerable interest with 292 comments. Brad of Perth probably encapsulated the general sentiments of the punters with this response: "These guys are a joke. We can be assured that every time BIS comes out with a "forecast", we'll get a good laugh out of it. They take all the positives going for the market and conveniently leave out all the negatives that are much more likely to affect the market - unemployment, tighter lending, rising interest rates. And if first home buyers suddenly stop buying who are second home buyers going to sell their houses to? We've barely come off bubble-priced housing and these clowns are predicting another boom? Ridiculous.

The average Aussie can't afford houses higher than they are now, and wages will certainly not be growing 20 per cent in the next three years. Aussies will be lucky if houses they buy now are worth the same in three years, never mind 20 per cent higher. Look to Sydney for the best case scenario - years of stagnation."

So, take your pick of the various scenarios. In the meantime I'm with Brad of Perth.