The future of Australian property prices

[explod]

Ok… enough of that… here’s something that I think holders of Aussie dollars (A$’s) will love to hear… the markets are beginning to trade and hold A$’s like a “reserve currency”… a currency that people will flock to in times of flights to safety! I had a Aussie reader send me a note saying that the A$ is becoming the “mining currency”… and, that’s not all…… as I shuffle across the stage with cane in one hand and my hat in the other! Seriously though… why not? I’ve always called the A$ the proxy for global growth… well… now it can be a flight to safety currency, a reserve currency, and the mining currency!

Chris again. Yes, the Aussie dollar continues to have a lot going for it. The RBA is expected to be raising rates sometime this year as inflation continues to tick higher. Australian producer prices increased .8% in the second quarter, matching expectations. Next week we will get the more important report on consumer prices in Australia. This inflation report is expected to show prices are rising, and should reverse recent sentiment that the RBA will be looking to cut rates instead of increase them. Reserve Bank of Australia Governor Glenn Stevens said in a speech last night that his nation’s mining-led growth is turning around consumer sentiment. His positive outlook was another sign the RBA will have the confidence to raise interest rates in the coming months.

Not to be left out of the fun, the New Zealand dollar traded up to a record high vs. the US$ last night. The kiwi rose as high as 87.28 US cents which is the strongest this currency has traded since it was freely floated. There certainly doesn’t seem to be anything holding these commodity currencies back right now. With investors worrying about the debt situations in both Europe and the US, countries with strong commodity based economies are certainly attractive. After all, would you rather own ‘stock’ in a country which has huge stockpiles of raw materials, or countries with huge stockpiles of debt? Currency investments are just like owning shares of that country, and investors certainly look like they are choosing the stock of countries with physical assets.

From Chuck Butler, Everbank overnight. Interest rates rises will be on the cards here in the months ahead. Aussie dollar at $1.094 as we speak.

http://www.dailypfennig.com/

 

[moXJO]

From Chuck Butler, Everbank overnight. Interest rates rises will be on the cards here in the months ahead. Aussie dollar at $1.094 as we speak.

http://www.dailypfennig.com/

Sounds like more foreign investment to me. The only way is up for housing
Not to mention I have been out every wk/end looking at houses to buy. All the good ones are being bought at asking price and on day/first wk/end of listing. People are still clinging to super high prices for the crap shacks and I have seen a few drop $90k since listing (I still think they are overvalued). IMO some of them are $100-150k over priced. But the market is still snapping them up.

 

[explod]

Sounds like more foreign investment to me. The only way is up for housing
Not to mention I have been out every wk/end looking at houses to buy. All the good ones are being bought at asking price and on day/first wk/end of listing. People are still clinging to super high prices for the crap shacks and I have seen a few drop $90k since listing (I still think they are overvalued). IMO some of them are $100-150k over priced. But the market is still snapping them up.

Yep, hold off whilst current conditions persist. The old addage "sell in boom, buy in gloom". A few years off yet, but have my powder dry too.

 

[FxTrader]

Not to mention I have been out every wk/end looking at houses to buy. All the good ones are being bought at asking price and on day/first wk/end of listing. People are still clinging to super high prices for the crap shacks and I have seen a few drop $90k since listing (I still think they are overvalued). IMO some of them are $100-150k over priced. But the market is still snapping them up.

Same in my area. Quality properties are selling, not quite as quickly as 6 months ago but still achieve good prices - for now. The "crap shacks" (LOL) are getting little interest and going stale in the listings. Just to many dreamers in my area think that their tired and dated 1970s rectangular BV is still worth half a million or more. Good luck to them but buyers are being quite selective now in my area and I have seen more than a few price reductions in the local listings lately.

 

[medicowallet]

hello,

oh gidday brothers, just back from doing 500 hrs of work this week and on the bus home there was this flyer on everyone's seat:

http://www.reiv.com.au/~/link.aspx?_id=4FF20028A7DB491F9728F6DB37B82EFD&_z=z

amazing, well another great week, called into festival hall on wednesday for the mass meeting, some great speeches from members of the community

oh well, take it easy brothers and enjoy the rest of the weekend

thankyou
professor robots

Has this flyer been on the bus today?

http://www.theage.com.au/business/m...till-out-of-reach-reports-20110728-1i11b.html

Just so that you know,

"
Home prices in Melbourne have fallen over the past year but unless house prices stay flat for a decade home ownership will stay out of reach for people on average wages, says a new report.

While Melbourne's median house price fell 2.1 per cent in the year to June, prices for the last three months of that period held firm, according to new data from Fairfax-owned Australian Property Monitors (APM)"

Oh well, prices stagnating, government with no funds left to prop up market, Robots cutting off home internet, walking and working more and hardly posting.

Sunshine and lollipops for all..

 

[trainspotter]

*turns on bath, reaches for bottle of gin, *glug glug*, grabs razorblades and does himself in*

SELL SELL SELL AND SELL LIKE THERE IS NO TOMORROW !!!!

*yawn, STREEEEEEEEEETCH* ...... bored now MW. Come up with something new. This thread has been going for a couple of years now and nothing has happened.

I know .... let's rehash Steven Keen. He is always good for a graph and a pie chart !!

 

[medicowallet]

SELL SELL SELL AND SELL LIKE THERE IS NO TOMORROW !!!!

*yawn, STREEEEEEEEEETCH* ...... bored now MW. Come up with something new. This thread has been going for a couple of years now and nothing has happened.

I know .... let's rehash Steven Keen. He is always good for a graph and a pie chart !!

Past performance is no indication of future performance.

TEN years with no capital growth is what they are saying to return housing to appropriate affordability.

Perhaps some investors might think that there are better places than housing for a while?

Patience, for times are very interesting at the moment. Within the week, we shall see the concessions Obama needs to make, and we will see the world react to that.

A couple of trillion extra into America keeps things going along, half that? well won't that put China in a dizzy? What effect will that have on Australians?

 

[trainspotter]

PATIENCE ???????!!!!!????? I have been exercising patience for a couple of years now and STILL nuffin has happened.

Intersting times ahead indeed. What effect will it have on Australian home prices? Coitus All. Sharemarket will tank. Rates will go up. Market flattens out again. Housing affordability (depending on which graph you use) will go up or down depending which camp you are in.

Jobs jobs jobs jobs is the key. Once this starts to slide and the people cannot afford to PAY for their mortgage you will see a definite trend down overall in house prices due to the fact we will be in a technical recession. Pretty damn close now.


But but but the people have to live somewhere so rentals will be a premium.

*goes back to bath and bottle of gin with razorblades in it*

 

[satanoperca]

The old chicken and the egg.

Which comes first :
1) House prices fall or stagnate and then unemployment rises
or
2) Unemployments rises and house prices fall.

I believe the first scenerio will apply.

Just have to wait and see.

Cheers

 

[medicowallet]

PATIENCE ???????!!!!!????? I have been exercising patience for a couple of years now and STILL nuffin has happened.

Intersting times ahead indeed. What effect will it have on Australian home prices? Coitus All. Sharemarket will tank. Rates will go up. Market flattens out again. Housing affordability (depending on which graph you use) will go up or down depending which camp you are in.

Jobs jobs jobs jobs is the key. Once this starts to slide and the people cannot afford to PAY for their mortgage you will see a definite trend down overall in house prices due to the fact we will be in a technical recession. Pretty damn close now.


But but but the people have to live somewhere so rentals will be a premium.

*goes back to bath and bottle of gin with razorblades in it*

If you think 2 years is a long wait, I think you will be upset at the future prospects of your holdings

 

[Tysonboss1]

The old chicken and the egg.

Which comes first :
1) House prices fall or stagnate and then unemployment rises
or
2) Unemployments rises and house prices fall.

I believe the first scenerio will apply.

Just have to wait and see.

Cheers

in scenerio 1, are you suggesting that house price falls will cause unemployment or that they are both symptoms of somthing bigger and house price falls will just happen first.

 

[satanoperca]

I am suggesting that if house prices fall, unemployment will rise.

To much in this country is linked to the continued rise of house prices, if they fall, so will confidence, so will our economy and the creation on new jobs with cease.

From my understanding, house prices in the US declined after unemployment started to rise.

Cheers

 

[trainspotter]

I am suggesting that if house prices fall, unemployment will rise.

To much in this country is linked to the continued rise of house prices, if they fall, so will confidence, so will our economy and the creation on new jobs with cease.

From my understanding, house prices in the US declined after unemployment started to rise.

Cheers

Stands to reason doesn't it?? Unemployment rises so therefore they cannot pay the mortgage so they have a fire sale to rescind debt or alternatively the bank gets involved and sells them up for the debt only. ERGO house prices WILL fall if unemployment starts to rise. No chicken and egg about it. This will happen.

 

[FxTrader]

I am suggesting that if house prices fall, unemployment will rise.

To much in this country is linked to the continued rise of house prices, if they fall, so will confidence, so will our economy and the creation on new jobs with cease.

From my understanding, house prices in the US declined after unemployment started to rise.

Cheers

In the U.S. case, house price declines preceded the decline in employment and there was a clear connection between them. The GFC event, brought about by the tide of defaulting NINJA and subprime loans that were securitized and sold to the rest of the world as triple A rated CDO products and the subsequent collapse of Lehman, saw a rapid decline in house prices.

Prior to the GFC, rapidly rising house prices tempted many American's to raid the home equity piggy bank via second mortgages and spend, spend, spend creating a false prosperity - their home equity was safe after all in a buoyant market (or so they thought). Consumer spending being 2/3 of GDP, the massive wealth destruction caused by tanking home prices and tight lending saw consumer spending fall and with it consumer/business confidence and jobs.

Consumer confidence here in Aus is already low, consumer spending is drying up and house prices falling (even with all those jobs,jobs,jobs), and I suspect these trends will continue for some time. Mortgage stress is a growing problem with households diverting an ever higher percentage of income to just paying the mortgage. 70% of Australian jobs are in the services sector; let's hope these jobs in the services sector hold up to keep the house price bubble inflated or we will see some serious wealth destruction here as well.

http://www.crikey.com.au/2011/04/27/our-fiscal-props-financial-services-and-mining/

 

[medicowallet]

Stands to reason doesn't it?? Unemployment rises so therefore they cannot pay the mortgage so they have a fire sale to rescind debt or alternatively the bank gets involved and sells them up for the debt only. ERGO house prices WILL fall if unemployment starts to rise. No chicken and egg about it. This will happen.

People are using their fake equity to consume. Once prices stagnate they cannot spend. Retail tanks and unemployment rises. Where is the evidence of this?

Why only the past 6 months grasshopper

 

[Knobby22]

Could be a good weekend to get a bargain at auction - what with the US intent on defaulting.

 

[trainspotter]

People are using their fake equity to consume. Once prices stagnate they cannot spend. Retail tanks and unemployment rises. Where is the evidence of this?

Why only the past 6 months grasshopper

1) Equity is already used up so no more consumerism.

2) Prices have stagnated already. I wrote about it two years ago.

3) Retail is hanging on by a thread. (I should know I have a retail shop)

4) Unemplyoment HAS NOT declined ..... yet to happen in mass droves.

3 outta 4 aint bad there Sensei! What's with the 6 months?

 

[medicowallet]

1) Equity is already used up so no more consumerism.

2) Prices have stagnated already. I wrote about it two years ago.

3) Retail is hanging on by a thread. (I should know I have a retail shop)

4) Unemplyoment HAS NOT declined ..... yet to happen in mass droves.

3 outta 4 aint bad there Sensei! What's with the 6 months?

6 months of no house price growth to fund the consumption.

Prices stagnated 6 months ago.

Unemployment in retail surely has been affected, and as the media likes to point out, non-mining related business is under extreme pressure.

Yet some on here are calling happy days, and that the past 2 years are some sort of indication for the next 2...

 

[trainspotter]

6 months of no house price growth to fund the consumption.

Prices stagnated 6 months ago.

Unemployment in retail surely has been affected, and as the media likes to point out, non-mining related business is under extreme pressure.

Yet some on here are calling happy days, and that the past 2 years are some sort of indication for the next 2...

Whaaaaaaaaa ??? Prices stagnated about 2 years ago dude. Go look back through the thread where this was advised by none other than my good self. The price rises in CERTAIN areas was about the same as price drops in CERTAIN areas.

Like I said ....... wait until the jobs start to DECLINE across the board. A few job losses in retail might smarten them up. **** service they provide anyhow in most shops I go in to so they deserve what they get.

Name them.

 

[FxTrader]

Like I said ....... wait until the jobs start to DECLINE across the board. A few job losses in retail might smarten them up. **** service they provide anyhow in most shops I go in to so they deserve what they get.

You have it backwards TS, I agree with a piece written by Kris Sayce back in March where he says...

"But even more than that, the mainstream have fallen into the trap of thinking the large external shock must come first. Wrong. What comes first is the slowing and then contraction of credit.

It is the slowing and the contraction of credit that causes the shock, not vice versa.

Simply because – as we’ve written before – any economy built on Ponzi finance will ultimately become a victim of Ponzi finance.

That is, as less credit is created and less credit is demanded due to borrowers being maxed out, there is less air being pumped into asset bubbles.

Ponzi schemes must always have an ever greater net inflow of new money. As soon as that inflow slows, credit slows, price growth slows, and the consumer begins to see reality.

House prices can’t grow when credit is slowing and then contracting. If you want to call that a large external shock, then you can. The evidence is already around you that this is already happening.

If you’ve been looking at unemployment numbers as a sign of a future shock, I’m afraid – as experience in the US shows – you’ve been looking in the wrong direction.

Unemployment will rise, but only after house prices have already fallen."

http://www.moneymorning.com.au/20110325/why-australia-is-set-to-follow-us-path-of-house-price-doom.html