House prices to stagnate for 'years'

[Mofra]

2. Commercial is about to get chopped up - note JPMorgan's bank analyst on the DJ newswire today talking about the denial in commercial at the moment:

"Commercial property values haven risen to the point where yields are at historic lows compared to interest rates, which suggests that either (i) the Australian 5 year swap rate is going to fall 300 basis points, (ii) rents are going to double, or (iii) commercial property prices are going to fall 50%,"

Lemme tell ya, rents aren't doubling in a bear market and rates aren't dropping 300bps with inflation above 3%

2008 is the reset year for the 19 year office-space supercycle; could be some fantastic opportunities arising in 09.

 

[BSD]

hello,

let me remind people of a couple of things:

isnt property still 7-8x average salary?

as that is what people are always telling me, which means guess what lads property is still as high as ever

thankyou

robots

Sorry mate, but I would have thought for most people that the funding costs of owning a new property under this multiple may actually highlight the bubble we now have.

Assuming a post-tax average wage of $40,000 - I would assume the financing costs of owning a $350,000 home would almost exceed 80% of such a wage.

When the average person cannot afford the average home, something is about to change.

 

[theasxgorilla]

Uuuummmmm, I don't think ramping overpriced property is a service to society.

When making people laugh, I've found it's better to have people laugh with you instead of at you, and ramping over-priced property isn't really a laughing matter either...

When it comes to the roof over our head we're a passionate lot aren't we???

Price, remember, must always be coupled with a perception of value in order to determine if something is over or under or fairly priced. If you had to pay more tomorrow for the same property, does it instantly become over-priced?

You can't blame a real estate agent or a property investor for trying to sell their stock. They're reward (ie. their roof over their head) is aligned with that goal. Buyers agents are the people it sounds like you need to find.

ASX.G

 

[Kimosabi]

When it comes to the roof over our head we're a passionate lot aren't we???

Price, remember, must always be coupled with a perception of value in order to determine if something is over or under or fairly priced. If you had to pay more tomorrow for the same property, does it instantly become over-priced?

You can't blame a real estate agent or a property investor for trying to sell their stock. They're reward (ie. their roof over their head) is aligned with that goal. Buyers agents are the people it sounds like you need to find.

ASX.G

I understand all of the above. What I don't like is the manipulation of people by the banks(easy credit) and agents(ramping) that drives the mania. The thing that disgusts me the most is when people come to the conclusion that unless they buy at rediculous prices they will never have the opportunity to own a house.

The Banks and the more experienced Agents know this, but continue encouraging people to commit during the suckers rally. When they run out of suckers, the rug gets pulled out from beneath the suckers and we start the whole process again.

Knowing all of this put's me in the position to become quite wealthy, but it doesn't mean I have to like the scam...

 

[YChromozome]

http://www.thisislondon.co.uk/news/...credit crunch, warns City watchdog/article.do

1 million could lose their homes.

UK Home Prices To Drop 10% In 2008?

http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=510980&in_page_id=1770

Look on the bright side. The housing bubble popping in the UK makes for good TV. You never got anything like this in the US :

​

 

[theasxgorilla]

Knowing all of this put's me in the position to become quite wealthy, but it doesn't mean I have to like the scam...

Totally appreciate that sentiment. And agree with it. But I don't think we should beat up robots because he presents a side of the arguement we don't necessarily like hearing. I don't think he lies, no more than statistics are lies. And those on the other side are all using their lies (statistics) and 'bear' media propaganda to opposite effect.

I can see both sides and have chosen (ahhh, freedom) which side I want to be on. The side buying the properties in his area. Melbourne bayside = heaven on earth, IMHO. Overpriced? Hmmm, well, that depends now doesn't it. Stagnating? Not yet mate.

ASX.G

 

[numbercruncher]

Our Perth Cousins have got a good dose of stagnating (or worse) over 07.

A new survey finds Perth house prices rose just 1.7 per cent in 2007, the weakest in the country.

http://blogs.thewest.com.au/news/news-blog-has-the-housing-bubble-finally-burst/

 

[Kimosabi]

Our Perth Cousins have got a good dose of stagnating (or worse) over 07.

What they don't tell you is that it's the premium property's that keep the median house prices artificially inflated, while the outer suburbs median prices start falling.

Looking at the debt loading of Aussies, our bust is going to make the Americans Bust look like a walk in the park...

 

[KIWIKARLOS]

What they don't tell you is that it's the premium property's that keep the median house prices artificially inflated, while the outer suburbs median prices start falling.

Looking at the debt loading of Aussies, our bust is going to make the Americans Bust look like a walk in the park...

I dont believe that for a second OZ is so fundamentally different to the US in housing and the economy that i doubt we will have a bust. Firstly the US is coupled to China only for its consumption where as we consumer and export. World food prices are skyrocketing and we are currently coming out of a bad drought and look to be making a big agricultural comeback for the next couple years. We have access to some of the cheapest electricity in the world. Our housing inventory in tiny compared to the 1 mill or 9 month supply they have in the US.

If we do experience a slowdown wouldn't interest rates come down in OZ thereby relieving stress on home owners not to mention the almost given drop in oil prices we will have due to reduction of demand.

The personal debt in oz is high but government debt is gooooone and we now have big surpluses, this gives the federal gov much more clout in combating any "bust" Imagine how our personal savings would increase if they did take that union blokes advice and pump a large part of the surplus into super.

In summary i think here in oz we are in a great position to come off this relatively unscathed compared to many many other economies. We are one of the few western countries that doesn't have an enormous trade gap. We export heaps of resources, agriculture and education and consume alot aswell.

 

[KIWIKARLOS]

one more thing more of a question.

If a person is facing economic hardship ie. about to loose their house isn't there a law stating that you can pull money out of your super to get you out of trouble?

Also i didn't think americans even had a super system so we must have much less debt than them because we by law have forced savings?

 

[numbercruncher]

one more thing more of a question.

If a person is facing economic hardship ie. about to loose their house isn't there a law stating that you can pull money out of your super to get you out of trouble?

Also i didn't think americans even had a super system so we must have much less debt than them because we by law have forced savings?

Superannuation fund trustees and RSA providers administer the release of benefits on the ground of severe financial hardship according to a simple objective test as well as a subjective test. That is, to be granted an early release you must:

be in receipt of a Commonwealth income support payment, and have been so, continuously, for the last 26 weeks; and
satisfy the trustee/RSA provider that you are unable to meet reasonable and immediate family living expenses.
Commonwealth income support payments include social security or service pensions; certain social security benefits; income support supplements; drought relief payments; exceptional circumstances relief payments; and Commonwealth Development Employment Projects (CDEP) Scheme payments.

If you satisfy both of the above tests, the trustee/RSA provider may, in any twelve month period, release to you one lump sum payment. The lump sum payment is to be no more than a gross amount of $10,000 and no less than $1,000 (or the balance of your benefit if it is less than $1,000).

http://www.apra.gov.au/Superannuation/Early-Release-of-Superannuation-Benefits.cfm

Why would people cash out their retirement security to pay a depreciating asset anyways ? Throwing good money after bad, unless you had a huge amount of equity really not worth it.

Still very little news from the Australian Realestate Fraternity this year on bubblevision, usually bombarded by them, maybe the reversal has begun hey ?

Australia average pretax wage = 55k , average House 440k , thats over 10x post tax income = Does not compute.

 

[numbercruncher]

If we do experience a slowdown wouldn't interest rates come down in OZ thereby relieving stress on home owners not to mention the almost given drop in oil prices we will have due to reduction of demand.

Quite possibly - but a slowdown would result in rising unemployment and pretty much a halt to wage Inflation.

As it stands Inflation is High and getting worse, the RBA must stand by its mandate and target Inflation in the band of 2 to 3pc, currently its 3.6pc.

 

[explod]

Today's Herald Sun at p20.

"The Adviser Edge investment research property review predicts that Melbourne property prices will jump another 15 percent in 2008, to push the medium price over $500,000 by the end of the year"

from property research head Louis Christopher.

Interesting. Still say the Herald Sun ar prop rampers. well see

 

[numbercruncher]

All they do is base their predictions on past performance, they certainly dont consider ongoing Inter/national economic developments, pure uneducated ramping - I hope they are leveraged to the eye balls

 

[theasxgorilla]

Interesting. Still say the Herald Sun ar prop rampers. well see

You've got to be kidding me???

Right before I sold my last property in Melbourne a colleague handed me a Herald Sun and told me I could take a look inside to see how far my house had gone down in price. 10% I think was the headline. The HS wouldn't know the proverbial poo from clay. The only relevance of this article is the effect it will have on group think. The twit who handed me the paper that day really believed my house had gone down, thats what counts.

ASX.G

 

[theasxgorilla]

Also i didn't think americans even had a super system so we must have much less debt than them because we by law have forced savings?

Exactly. Not only that, but because many of us have been forced to think in terms of super now for 15 or more years we really do plan our own retirements which requires some degree of 'financial literacy'. We're fiscally stupid is what I'm trying to say.

The US does have a retirement plan system called a 401k. I believe it's tax advantaged, but not compulsory. Don't quote me on this, cos I don't really know much about the details.

 

[KIWIKARLOS]

Average house price may be 425K or whatever but there is heaps of smaller townhouses and units which are mush less and there are plans for tens of thousands more. The places that will take a battering are houses in the west of sydney. Town houses etc and houses within 25 km of Sydney or near major metro centres such as chatswood and parramatta have no problems.

With rising fuel prices public transport will become more attractive and I believe in 5 + years housing near major public transport infrastructure will be going up in price as people look to move away from the burbs where they comute for 1 hour + a day by car. Its just not going to be economic to drive 50kms and pay multiple tolls alone the way, i think people will take the transport savings and put them into paying more for better location.

Thats why i bought my place about 5 mins walk from a railway

 

[numbercruncher]

Smart investing Kiwi ....


Yep urban consolidation will be big in coming years, everything smells like bad news for Mortgage belt realestate, West Sydney case in point.

Alot of boomers will downsize or sea/green change bringing loads of houses from the burbs to market, Gen yers simply arnt buying, so buyer and seller will have to meet somewhere.

Throw in rising Interest rates and Gen yers can afford even less!

 

[robots]

hello,

Why would people cash out their retirement security to pay a depreciating asset anyways ? Throwing good money after bad, unless you had a huge amount of equity really not worth it.

ha ha ha ha ha, with super having all its gains knocked out for 07 it will be interesting times ahead for it and SMSF's

Still very little news from the Australian Realestate Fraternity this year on bubblevision, usually bombarded by them, maybe the reversal has begun hey ?

ha ha ha ha ha, still out sunning thenselves NC, most not back to mid feb how you dream for that job

Australia average pretax wage = 55k , average House 440k , thats over 10x post tax income = Does not compute.QUOTE]

ha ha ha ha, guess what NC that tells me RE is as high as ever, so much for stagnation

thankyou very much

robots

 

[numbercruncher]

hello,


ha ha ha ha ha, still out sunning thenselves NC, most not back to mid feb how you dream for that job

Im not sure thats true, I go into the realty office every two weeks and whack the super cheap rent on the CC for reward points (making it even cheaper rent ) and theres always a bunch of board looking salespeople standing around

Sometimes I wonder how the people whom own this house I rent remain solvent, ahh the deductions, gotta love it, benefits us both at the expense of your hard earnt tax