The future of Australian property prices

[satanoperca]

It is DIFFERENT here

MW

Yes it is, no affordability problem in Oz compared to China.

Calculations based on Soufun data show that in the opening months of 2006 an average-price new apartment in China's capital would cost around $US100,000 ”” the equivalent of 32 years' disposable income for the average resident.

By 2011, the average price had more than doubled to $US250,000, but relatively modest increases in income mean it would now take 57 years of saving for the average resident to cover the cost.

http://www.theaustralian.com.au/business/news/the-great-property-bubble-of-china-may-be-popping/story-e6frg90x-1226072284347

 

[trainspotter]

China has 1.3 billion people of which 55% live in rural areas and moreover share less than 11.3% of the societal wealth. SO therefore 45% of the population live in a metropolitan area controlling 88.7% of the societal wealth. Not a bad ratio really. In other words there are some very, very poor people dragging the median average residents housing affordablility down. Amazing what you can do with statistics isn't it ?

Is this the same as Australia? Sort of ...... but on a much smaller scale.

 

[greebly24]

You can't believe what you read in the media (in which I work) as real estate advertising is such a large component of media revenue. Pick up the weekend paper and see how large the real estate section is and you'll know what I mean. Think what it costs for a tiny classified ad, then multiply that hundreds of times over dozens of pages --- big big money.

Whenever we do stories on real estate on television, it is usually positively-skewed (perhaps because that's what the majority of people want to hear). Usually its about cheaper suburbs destined to boom for some unspecified reason. Then we'll ask a real estate agent or representative from a real estate association for their opinion, which is always bullish. But they're just talking up their own game so you can't blame them.

It's an easy story to do, especially on a quiet weekend. Actually, that's not entirely true. We've done some beat-up colour stories lately about supposed booming suburbs, but when we send the camera crews out to film some random auctions, they never manage to get any bids. Then its back to using file vision from the property boom, when people actually bid against each other. That's why you see the same shots used ad nauseum. Stories in winter showing auctions in summer where everyone's wearing late-90s fashion. We only do it because we have to. We try to get new vision.

Also interesting, Channel 9 has been struggling in the ratings, so soon they are going to play a reality-TV home-renovation show called The Block at 7PM, five nights a week starting some time in June. This is a huge gamble! They are hoping this will rate well, and set up the rest of the evenings viewers.

I personally doubt it will work. Five nights of home reno shows per week? In this market? Given the corruption in real estate though, I wouldn't be surprised if the competing renovaters receive massive bids over the phone at their eventual auctions. They'll probably claim it was from Chinese interests, but its more likely to be from the network execs themselves, trying to cover their butts on their ratings failure.

I remember a couple of years ago, when the home-reno shows were dying out, there was one hosted by that guy with the mustache from the movie The Castle. Anyway, one couple spent ****loads renovating their house and then got no bids at auction. They cut to a couple of other couples, both of whom also got no bids. It was the most depressing television I'd seen since 911.

So, for all our conjecture, the success or failure of The Block 2011 will probably also be a good indication of the future of Australian property prices in the near term. Enough property bulls out there with ratings boxes in their homes just might make it work.

PS - The SA govt today announced that they're fazing out the $8,000 First Home Buyers Bonus over the next two years (but adding a raft of extra charges and fees instead). And this in a market where FHBs are the lowest segment of new mortgages in years. Hmm.

 

[medicowallet]

I doubt the houses on the block will make anything over cost this year.

 

[medicowallet]

The weekend is shaping up to be a fantastic time.

Morning toast and tea on the front patio. I might sleep in a little bit.

Enjoying the tranquility of the past six months. Less cars driving by on the weekend.. I can now hear the birds and wildlife. I may chat to my neighbour, the community spirit is fantastic. I live in a rural area, everyone here has a gun, no violence, and we love our big diesel 4x4s.

This is truly the lucky country.

Need to make ends meet? Take on an extra shift, another job, cancel un-necessary luxuries like the internet. Read a book instead of going to the movies, buy online, do some gardening.

Paradise

MW

 

[cynic]

Cynic
You have done well which is possible on some property and I guess you have sold all at a profit and now looking at the next bubble PM's I guess?

Glen48, Trainspotter ,Thanks for taking the time to read my recent egomaniacal tirade and thankyou for the compliments. I consider myself honoured to be receiving such acknowledgement from persons who've clearly demonstrated significant insight and discernment in financial/economical matters throughout the various posts that I've read to date.
I must confess that, whilst I'm very proud of my overall percentage returns on investments/trades, I am still a member of the "wannabe" trader/investor club due to the small amounts of capital deployed.( I used to boast that I was a "hundredaire", fortunately, I've managed to add a small number of noughts since then.)

I've retained two of my residential properties in which I now have 100% equity (courtesy of that wonderful first "vendor's" grant that enabled me to fetch inflated prices for my other two properties). I'm keeping both of these, I live in one and the other is being kept "on ice" in preparation for my "escape" from the "big smoke" when the financial (un)reality actually sinks in. I could realize a healthy gain on either one in anticipation of the bargains that I believe are drawing ever nearer, but am too lazy these days to be particularly concerned. I want to retain two, and am happy with the one's that I've got (irrespective of the possibility of future declines in prices - zero valuation can no longer harm me).

I generally don't have to travel far to identify potentially profitable investment/trading opportunities.
I've encountered so many people whom have failed to notice the "ponzi" structure of many of our preferred investment vehicles, that opportunities just seem to keep popping up.

As for PM's, much as I love to keep a very small amount of gold and silver in my possession (I have a minute gold nugget that I found during my prospecting excursions in the 1980's) I've chosen not to speculate on them after taking small net losses throughout the past three decades. So whilst PM's are lovely to actually hold in my hands, their market behaviours seem to be poorly suited to my preferred trading style.

Totalisation pools may take a hit at some stage (although financial desperation may produce a short term surge in gambling first), so I won't be brushing the dust off of my Winning Greyhound Racing Formulae any time soon. As for lotteries, I used to make money up until a short time after the upgrade of the machine that selects the balls. So that investment vehicle is no longer suitable.

I'm not sure who those kind investors are who've been topping up my trading account ledgers with EUROs and Pounds lately, but they have my utmost gratitude for their generous contribution towards my "Greed is Good" crusade. Much as I hope these recent market behaviours continue, I'm anticipating that my strategy may require further adaptation (but I'm still awaiting my warning from GOD before I react).

I believe we've both foreseen what's coming Glen48, as I think I can recall you mentioning "beans and bullets" in one of your other posts.

I strongly suspect that a time is coming when a scarcity, that directly threatens physical survival, will awaken mankind to the illusory pricing nature of our currently preferred investment vehicles. Hypothetically, what use will PM's, paper/plastic currency etcetera be in a world that's temporarily run out of food following the liquidation of farms/orchards etcetera? Will anyone actually be willing to trade what little food they may have in exchange for inedible asset classes at the risk of going hungry?

Fortunately, my bees don't seem to be at all concerned about the state of our financial markets, they just keep crosspollinating flora and producing honey, regardless of the antics of the mighty "DOWN JOKERS" index. Rainfall in my area also appears to be impervious to financial catastrophes.So I think I'll survive the food shortage. Hopefully no-one will steal my bees, they're generally quite hostile to trespassers. Maybe there'll come a day when I'll be able to trade some of my surplus honey for PM's. (Don't laugh! Just remember, you heard it from me first!)

P.S. Trainspotter, you asked some excellent questions in your post, and I will furnish a reply within the next day or two. I would do it now, but I must catch some sleep before the DAX and FTSE open, just in case God has an important message for me (I need some dreamtime to open the communication channel! If only I could work out how those tea leaves and crystal balls work! Still, I'm always grateful for small mercies and hopefully not too small profits!)

 

[againsthegrain]

I doubt the houses on the block will make anything over cost this year.

Im sure the producers have a backup plan in the form of alternate endings. I wonder if bots is sitting there giggling everytime he sees the block commercial on

 

[Glen48]

Cynic
Thanks for taking the time to explain your case which is exactly what a forum is about.
Some people have made money out of real estate and good on them but what most are saying the bubble has popped because we are in another unknown world were prices were driven by easy cheap credit not the normal forces which drive up prices.
Read any ponzi scheme from Tulips to Timber plots and insert Australia Houses it will be the same in the long run.
I bet the men who made buggy whips agreed Henry Ford new machine would not last.
Gold you are correct you can't eat it but you can sell it and buy food and a farm with its own water and producing food will be a good asset although the starving hoards will be a problem just like USA is now were mobs walk in to a shop help themselves and walk out and as things get worse they will be less police etc.
If you want to hold on the RE thats your choice and I won't come back in 12 mts time and say I told you so, one of us is wrong about it all time will tell.
You keep you money on thr Black and ride it out.

 

[medicowallet]

Im sure the producers have a backup plan in the form of alternate endings. I wonder if bots is sitting there giggling everytime he sees the block commercial on

Probably too busy doing overtime to cover the losses this year.

 

[Glen48]

TV shows and Newsprint have their share of scamming buyers into the ponzi scheme as well, making victims think you can buy a dump and make a motza with out showing the true costs they are right up there with First homes bribe, cash for clunkers amd convincing people to vote in any election.,

 

[NewOrder]

Cynic
Thanks for taking the time to explain your case which is exactly what a forum is about.
Some people have made money out of real estate and good on them but what most are saying the bubble has popped because we are in another unknown world were prices were driven by easy cheap credit not the normal forces which drive up prices.
Read any ponzi scheme from Tulips to Timber plots and insert Australia Houses it will be the same in the long run.
......

I love RE and have never lost on it but have some pretty basic criteria eg no mortgage insurance, buy in areas with good PT and facilities.
I find out the reasons for sale and how long it has been for sale, REA are twits who give away too much info which only serves the buyer not their client which is the seller.

Loving this thread especially your work Cynic

TBH I have bigger life issues than the property market, if it implodes worst case for me is that I would go and live in one of my houses and give up my rental which is where I prefer to live. I have big equity in all properties so am not spooked by the current flat market.
Wouldn't want to be a PPoR buyer from the last 12 months who purchased using their heart not their head. Property is a great investment for people who are actually investing without big borrowings, not those buying their dream home but selling their soul to aquire it.

FTR I don't think we will see a massive downslide, some would be great in the next few years as I would like to buy again.

 

[Glen48]

New World Order
The banks need to keep debt increasing to keep the ponzi scheme going and they will get you in to debt even if you don't want to.
There are 300,000 vacant houses in Ireland you could look as the victims move out of Ireland and move over seas because there is no future for them in Ireland.
How about a house in USA for 55K .
If you want to live in a house you paid X for and will be worth nothing because there are no buyers that is your choice.
Check back on a few months when house prices have dropped and Gold is nudging $1,800

 

[NewOrder]

New World Order The banks need to keep debt increasing to keep the ponzi scheme going and they will get you in to debt even if you don't want to.
There are 300,000 vacant houses in Ireland you could look as the victims move out of Ireland and move over seas because there is no future for them in Ireland.
How about a house in USA for 55K .
If you want to live in a house you paid X for and will be worth nothing because there are no buyers that is your choice.
Check back on a few months when house prices have dropped and Gold is nudging $1,800

PMSL New Order is in reference to the band not NWO as in "we're gonna take over the world, us peoples of the elite"

Your enthusiasm is worthy of a standing ovation, truly I am impressed, thing is I don't have the same viewpoint. How can a house be worth nothing if it can be lived in? It is a roof, walls, floor etc I can live in it for nothing but a few bucks a week should the supposed bubble burst, my tenants die or the rental I am in gets blown up. 20 years in the Melb property market and I am still smiling. But really I do hope it does go down in the next little while so I can buy again.

We are not in Ireland, we have reasonable employment, I don't think housing is going to crash. Sure it may go down more but I am not going to worry unless it goes down by over 50%. If it does PM your addy and I will send you a case of this great Organic, Merlot I get at the local.

Even after 2 earthquakes, a GST hike and a super crappy economy I could still sell my NZ property (although it might take a few years ) and still not lose money.

There is a house opposite me for sale now, a 4bd weatherboard, very nicely reno'd but for the million they want for it, I would not go near it. That isn't a good RE buy but it doesn't mean that all RE is a bad investment opportunity. There is still a lot of movement and good prices around here though, will be interesting to see what they do get for it.

 

[medicowallet]

How can a house be worth nothing if it can be lived in?

We are not in Ireland, we have reasonable employment, I don't think housing is going to crash. .

YES

It is DIFFERENT HERE!!



A house can be worth nothing in many different ways.

1. It is worth nothing to a person if it is in negative equity.

2. It is worth nothing to the bank if the person walks away from a bad debt.


But just in case people didn't realise

IT IS DIFFERENT here!!

 

[trainspotter]

Thanks for the equitable reply cynic. Greatly appreciated. I await with baited breath for the answers to my questions. I am not having a go about the situation. I am very keen to learn so that when the situation arises (possibly in the future) I can look back into the dark recesses of my mind and understand what is happening. I am one of those people that need to ask straightforward questions to get answers so I can compute in my tiny brain.

Thanks again for the forthright response.

 

[trainspotter]

The weekend is shaping up to be a fantastic time.

Morning toast and tea on the front patio. I might sleep in a little bit.

Enjoying the tranquility of the past six months. Less cars driving by on the weekend.. I can now hear the birds and wildlife. I may chat to my neighbour, the community spirit is fantastic. I live in a rural area, everyone here has a gun, no violence, and we love our big diesel 4x4s.

This is truly the lucky country.

Need to make ends meet? Take on an extra shift, another job, cancel un-necessary luxuries like the internet. Read a book instead of going to the movies, buy online, do some gardening.

Paradise

MW

Bwahahahahahhahahah *gasp* hahahhaahhahahhggagagaggaggagaaG ..... now that is truly funny. Top post MW ...... classic stuff. :

 

[NewOrder]

YES

It is DIFFERENT HERE!!



A house can be worth nothing in many different ways.

1. It is worth nothing to a person if it is in negative equity.

2. It is worth nothing to the bank if the person walks away from a bad debt.


But just in case people didn't realise

IT IS DIFFERENT here!!

But you did not read my post, it is not worth nothing if I can live in it for a few bucks a week. You are comparing a person who has invested up to the hilt with my situation where I have factored in a complete crash of the market. My plan B is that I could live in one of my investments for bugger all per week if I had to.

Sits well with me

 

[Glen48]

Let me see if I have the straight NWO you have spent $XK on a property that is now worth nothing but needs to be mainatined, rates etc.
At least you won't have to insure it if you want another house you can buy one get one free from any bank.
You can also live in a tent or cave and it would be cheaper.

 

[NewOrder]

Let me see if I have the straight NWO you have spent $XK on a property that is now worth nothing but needs to be mainatined, rates etc.
At least you won't have to insure it if you want another house you can buy one get one free from any bank.
You can also live in a tent or cave and it would be cheaper.

I will reply when you use my proper login name. I am all for the banter but without due respect there is no point.

 

[trainspotter]

Let me see if I have the straight NWO you have spent $XK on a property that is now worth nothing but needs to be mainatined, rates etc.
At least you won't have to insure it if you want another house you can buy one get one free from any bank.
You can also live in a tent or cave and it would be cheaper.

LOL Glen48. Where do you live BTW ??? The GoGo Bar in Pattaya? How is the Chang beer in Cheap Charlies? Tell Molly the katoey I said hello !

You can live in a foreign country anytime when you can't hack it here.