House prices to stagnate for 'years'

[numbercruncher]

Churches join the war on Realestate ...

Churches are planning to make city properties and land available for inexpensive housing to fight Victoria's home-affordability crisis.

Church-run charities say prime land worth hundreds of millions of dollars has been sitting untouched for more than 100 years.

And the charities want the land to be used to help the state's most needy and build affordable rental homes, Fairfax newspapers say.

Uniting and Catholic church charities and the Salvation Army back the plan, which comes as Australia's Reserve Bank is expected to announce another interest rate rise.

Fujitsu Consulting analyst Martin North said JP Morgan/Fujitsu research showed up to 300,000 Australians were at risk of losing their homes this year.

About 750,000 households will struggle to pay food and bills.

http://news.theage.com.au/churches-to-tackle-housing-crisis/20080203-1prd.html

 

[numbercruncher]

Brisbane Joins war on Realestate ...

Council two weeks ago unanimously approved a 35 per cent discount on infrastructure charges, which took the median figure for new house lots down to about $22,000 from $34,000.

The changes, which were formulated after consultation with industry, took the maximum price for house lots down to about $61,000 from $94,000.

And the minimum infrastructure charge fell to $18,400 from $28,200.

http://www.brisbanetimes.com.au/news/queensland/rowell-plan-to-save-homebuyers-40000/2008/02/01/1201801011652.html?page=2

And on top of this new mayoral candidate plans more ......

Industry groups have applauded a proposal to put a lid on council infrastructure charges that could wipe up to $40,000 off the cost of a new home in Brisbane.

Labor lord mayoral candidate Greg Rowell today unveiled a $39 million plan to cap infrastructure charges on all new homes at $20,000 per house lot and $14,000 per unit if he was elected on March 15.

The council would also place a moratorium on future price rises while an independent review into the infrastructure charges system was conducted.

Both the Urban Development Institute of Australia (UDIA) and the Property Council welcomed the initiative, which would also try to clear the back log of development assessment applications and open up further land supply.

So if the cost of New properties is falling rapidly via Government intervention, so are used ones

Greg Rowell's 5-point plan

1. Cap infrastructure charges and undertake review of charging system.

2. Speed up development assessment process by employing more staff and fast-tracking "simple" applications.

3. Increase housing supply through transit oriented development precincts and urban renewal.

4. Increase land supply through annual land audit and work with Queensland and federal governments to masterplan surplus land holdings.

5. Support social housing by waiving development applications and lodgement fees; make Brisbane Housing Company exempt from infrastructure charges.

Vote Rowell for Mayor!

 

[Judd]

It is very sad that people will lose their home or need to seek assistance in obtaining food. You can debate the cause until the cows come home and agreement will never be reached. A number were possibly greedy and a number were financially illiterate but the end result is the same in my opinion: most became committed to chasing a "lifestyle" and committed to more debt than they could possibly handle. Probably thought they were doing the right thing because they were simply following the herd.

I remember about 4 years ago overhearing a conversation of one of my staff outside my office. Not that I wished to hear it nor could I get up and close the door as that would have indicated to her that her conversation with the bank was no longer private causing both of us some embarrassment.

She was not on too bad a salary and hubby was also working. Had this house in the suburbs but.....he became ill, could no longer work, they could no longer afford the mortgage and were about to lose the house plus they had credit card debt. That was 4 years ago when things were relatively benign. Today the stress would have been just as bad but the debt would probably have been worse.

I'm afraid the financial system has a method of flushing out and disposing of these problems. It causes a few more problems but that does not seem to be an issue to the system as it is presently structured. The Americans had a good concept of 30-year fixed rate mortgages (I've never really come to grips with the credit score and points system.) Possibly that is something this country should consider. In reality (no pun intended) I don't have the answer.

 

[numbercruncher]

Housing Industry smells trouble and almost sounds like its begging.

RBA urged to put rates rise on hold
Posted 52 minutes ago

Queensland's housing industry is hoping the Reserve Bank board will go against market sentiment and keep interest rates on hold.

The Reserve Bank is widely expected to raise the official cash rate by 25 basis points (0.25 per cent) following Tuesday's monthly board meeting.

Housing Industry Association spokesman Warwick Temby says housing affordability in Queensland is already at crisis levels.

"There's certainly been lots of people predicting that interest rates are going to go up again next week, but there's so much volatility in the market out there," he said.

"I think the best thing the Reserve Bank could do is to sit on its hands for a while and see how that market settles down.

"There's a real risk out there that the rug has been pulled out from underneath people's confidence to invest and what the Reserve is trying to achieve might already be happening."

http://www.abc.net.au/news/stories/2008/02/03/2153051.htm?section=business


Sorry housing Industry but RBA's mandate is to protect my savings against the ravages of Inflation, not to protect over inflated asset prices.

 

[YChromozome]

From the article ....
So 7.5m Households in Australia .....

10pc in severe mortgage stress.

4pc of Mortgaged properties tipped to be in some level of default/repossession this year.

Mortgage rates will go up .5pc maybe 1pc throughout this year.

It's even worse if you consider that 35% of the households in Australia have a mortgage, so of the 7.5million households, you have 2.6million mortgage holders.

That means as many as 28% of households with a mortgage will have mortgage stress . . 11% will default.

And what happens if rents rise more than wages/inflation. That's probably just as many renters under stress.

And a lot of disposable income being stripped from the economy. Dare I say, if the predictions are true, we are stuffed. Sounds like recession time.

 

[Tysonboss1]

Sorry housing Industry but RBA's mandate is to protect my savings against the ravages of Inflation, not to protect over inflated asset prices.

I Don't really think interest rate rises are an effective way to control inflation.

How is raising the interst rate going to keep inflation down.

I actually see raising the interest rates today as making the housing "rental afforabilty crisis" worse.

In cities where there is already massive shortage of rental properties, raising interest rates will just mean alot of development projects and subdivsions won't get done this year meaning less supply next year to qwell the increased demand. so interest rate rises today will increasre rents tomorrow, and thew cycle continues

 

[numbercruncher]

It's even worse if you consider that 35% of the households in Australia have a mortgage, so of the 7.5million households, you have 2.6million mortgage holders.

That means as many as 28% of households with a mortgage will have mortgage stress . . 11% will default.

And what happens if rents rise more than wages/inflation. That's probably just as many renters under stress.

And a lot of disposable income being stripped from the economy. Dare I say, if the predictions are true, we are stuffed. Sounds like recession time.

Damn good point YChromozome, I didnt even consider when writing up that, Sunday AM wave of dumbness in guess (does that 35pc include Investment properties with a mortgage?)

Yes and thats something people dont shed much thought for, all this money going into Housing simply strips it out of other areas of the economy. I mentioned it in this thread once before and got the usual response from the RE permabulls that people shouldnt be wasteing money anyway blah de blah ....

I think its already showing up in the bottom line, one example would be WOOLWORTHS LIMITED mediocre half year result that to me seems to not even beat food price inflation.

 

[Flying Fish]

Wonder what happens witha .5% rate rise ... ouch

 

[numbercruncher]

I Don't really think interest rate rises are an effective way to control inflation.

How is raising the interst rate going to keep inflation down.

I actually see raising the interest rates today as making the housing "rental afforabilty crisis" worse.

In cities where there is already massive shortage of rental properties, raising interest rates will just mean alot of development projects and subdivsions won't get done this year meaning less supply next year to qwell the increased demand. so interest rate rises today will increasre rents tomorrow, and thew cycle continues

Well I can tell you the RBA and Government and Myself dissagree, Interest rates do help control Inflation.

Developers arnt going to moth ball their Businesses because of rising Interest rates, just like you arnt going to quit your job because of rising interest rates.

Read article above, Brisbane council slashing Infrastructure charges and new mayor hopeful plans to slash them even further.

This is the RE peak, next wave of land releases will be cheaper and developers will make atleast the profit they are now.(imho, according to the evidence)

 

[numbercruncher]

Wonder what happens witha .5% rate rise ... ouch

They are saying we could see upto a 1pc increase over the coming year.

350k mortgage, 1pc = 3500 or $70 a week.

 

[Flying Fish]

They are saying we could see upto a 1pc increase over the coming year.

350k mortgage, 1pc = 3500 or $70 a week.

Ouch thats two slabs of VB lol. Might sit back and have a few for those wantbe property tycoons lol

 

[Kimosabi]

I Don't really think interest rate rises are an effective way to control inflation.

How is raising the interst rate going to keep inflation down.

Ok, lets get this straight, the Reserve Bank creates the inflation by creating more money out of "Thin Air"

They then try to control the Inflation they have created with Interest Rates.

Does anyone else see a problem here.

Why have we got an organisation that causes Inflation, attempting to control the Inflation it creates.

Hello, the sooner we F^ck off this bullsh1t system off and go back to Sound Money the better.

 

[BSD]

Increasing interest rates lowers disposable income for those with mortgages. It also lowers profits for equity holders through interest costs and lower disposable incomes. Renters suffer as much as owners as rents rise.

Woolworths and other retailers will then find it harded to pass-on the rising cost of inputs.

Woolworths will post lower profits, reduing the income of shareholders. Suppliers will be squeezed, reducing the income of their shareholders.

Easy money from property and sharemarket speculation is removed from the economy.

While rate rises will always work better on demand pull inflation, they also assist with supply push.

From the squealing in the press, it would appear the rate rises are (finally) starting to work.

Now as long as fiscal spending is wound-in, inflation should be held in check.

First step - cut all non-means tested benefits to anyone earning above the minimum wage.

 

[YChromozome]

Yes and thats something people dont shed much thought for, all this money going into Housing simply strips it out of other areas of the economy.

The other thing to consider is the use of homes as ATMs. As house prices were rising homeowners took out home equity products to fund other discretionary spending. Many also spent the "capital gains" even though it wasn't relised. (You just have to look at company profits over the last couple of years)

As soon as the growth rate of houses start slowing, that is money being stripped from the economy. If houses don't go up 15% this year, that's effectively 15% of everyones house that is not being spent. (Slight exaggeration, but close)

So to take the threads prediction, even if house prices stagnate for 'years' we are in big trouble in terms of consumer spending. And what happens if that consumer spending allows employers to keep and grow staff.

 

[Flying Fish]

Ok, lets get this straight, the Reserve Bank creates the inflation by creating more money out of "Thin Air"

They then try to control the Inflation they have created with Interest Rates.

Does anyone else see a problem here.

Why have we got an organisation that causes Inflation, attempting to control the Inflation it creates.

Hello, the sooner we F^ck off this bullsh1t system off and go back to Sound Money the better.

Um how is sound money going to work these days?
Perhaps we should start exchanging seashells for important things like cans of beer and bottles of Jim beam. Thankyou.

Reality is always much clearer when totally pissed.

 

[Kimosabi]

Um how is sound money going to work these days?
Perhaps we should start exchanging seashells for important things like cans of beer and bottles of Jim beam. Thankyou.

Reality is always much clearer when totally pissed.

The same way it worked in the past.

I don't have a mortgage or any debt.

I want my money backed by something more substantial than "Thin Air". If the banks can make money out of "Thin Air", why can't I pay off a loan by giving them a bucket of air?

 

[numbercruncher]

Ok, lets get this straight, the Reserve Bank creates the inflation by creating more money out of "Thin Air"

They then try to control the Inflation they have created with Interest Rates.

Does anyone else see a problem here.

Why have we got an organisation that causes Inflation, attempting to control the Inflation it creates.

Hello, the sooner we F^ck off this bullsh1t system off and go back to Sound Money the better.

Worthwhile to note the effects of Globilisation on Inflation as well.

In the beginning Inflation was kept in check with China sending us cheaper than cheap goods that we could never produce at the same price.

As things change, China internal price pressures, US fed slashing rates adding massively to money supply etc etc etc we get to import inflation

I agree with your sentiment on the System, theyll never willingly give it up though unless it implodes

 

[BSD]

The same way it worked in the past.

I don't have a mortgage or any debt.

I want my money backed by something more substantial than "Thin Air". If the banks can make money out of "Thin Air", why can't I pay off a loan by giving them a bucket of air?

Of course, you would prefer your debt backed by a shiny rock with limited utility that comes out of the ground.

If you actually believe in the debasement of our currency - you should borrow all you can carry.

 

[Tysonboss1]

Developers arnt going to moth ball their Businesses because of rising Interest rates, just like you arnt going to quit your job because of rising interest rates.

Rising interest rates will affect both the number of develpers conducting developing activites, especially the small scale stuff suchas investors knocking down and building back duplexes,

as well as reducucing the amount of developments the active developers are conducting,

 

[Kimosabi]

Of course, you would prefer your debt backed by a shiny rock with limited utility that comes out of the ground.

If you actually believe in the debasement of our currency - you should borrow all you can carry.

Thats the whole point. A limited amount of money stops Inflation which is really another form Taxation.

Ever wondered why nobody saves anymore. There's no point because Inflation devalues the money you have saved.

Debt = Slavery, obviously the majority of people are either too stupid or ignorant to do some research to find out they are being f^cked up the Ass...