The future of Australian property prices

[Glen48]

Once there are thousands of properties on the market the tenant will tell you the rent guess most will be happy to have some money coming in and to have some one in the place as security.

 

[banco]

Interesting passage from Paul Krugman's The Return of Depression Economics:

By the late spring of 2006, however, the weakness of the market
was starting to sink in. Prices began dropping, slowly at first,
then with growing speed. By the second quarter of 2007, according
to the widely used Case-Shiller home price index, prices were
only down about 3 percent from their peak a year earlier. Over the
course of the next year they fell more than 15 percent. The price
declines were, of course, much larger in the regions that had experienced
the biggest bubbles, like coastal Florida.

 

[medicowallet]

What, the government pays for interstate holidays to visit grankids, will they buy you a new caravan and fourwheel drive? I don't think so.

The pension is peanuts, trust me, from spending time with some retirees it is better to have a bit of wealth.

And when it comes to nurcing homes it is good to pay a bit extra.

What grandchildren?

Too busy working to pay off the McMansion to do the act to make em.

They wouldn't be affordable with the monthly repayments...

 

[satanoperca]

If there is a housing shortage, why so much supply coming onto the market?

Figures released last week by SQM Research revealed that residential property listings for the month of July 2011 rose by 13,476 to 377,315 nationally. This is a 4% increase from June 2011, as well as a 22% increase when compared to the corresponding period last year (July 2010).

and Melbourne going for Gold.

Melbourne was also the capital city to record the largest year-on-year increase, rising by 45% since July 2010.

So just to keep up to date :
1) Property prices have fallen for the last six months nationally
2) Unemployment on the rise
3) Housing inventory for sale building up rapidly
4) Our debt burden has increased since 2008

and somehow property will continue to rise

hmmmm, starting to look like the only thing that is different in Oz is we are four years behind the rest of the world.

Stay tuned.

Cheers

 

[greebly24]

Best way to make money in real estate is to rent/buy the cheapest place you can, whilst also buying the most expensive place you can and renting it out. Let the renters pay off your big debt, whilst you pay off the small one.

If you've got a big house as your PPOR, and are renting out a little flat as an IP, you're doing it wrong.

 

[prawn_86]

Best way to make money in real estate is to rent/buy the cheapest place you can, whilst also buying the most expensive place you can and renting it out. Let the renters pay off your big debt, whilst you pay off the small one.

If you've got a big house as your PPOR, and are renting out a little flat as an IP, you're doing it wrong.

Wouldnt it make sense to get a place that will be cash-flow positive asap?

My analysis has shown that the more expensive the place is, the lower the rental return (in general), meaning more you need to contribute to pay off the loan...

 

[greebly24]

Wouldnt it make sense to get a place that will be cash-flow positive asap?

My analysis has shown that the more expensive the place is, the lower the rental return (in general), meaning more you need to contribute to pay off the loan...

Very good point. But you can negatively-gear all the losses on your (more expensive) IP.

 

[greebly24]

A little while ago I corrected someone who said that some property in some places had dropped by up to 40%, by pointing out a couple of places in WA & QLD that had dropped 50%. Then I read this:

"Creditor chases valuers over lost funds" AFR, Property section, 18/8/11

Long story short: Angas Securities lent people money based on RE valuations, then lenders defaulted, property sold at auction for less than loan, so Angas suing valuers instead.

"This Noosa Heads riverfront home was valued at $8.1 million in October 2009 and sold for $4.1 million in March 2011." 50% loss

"One property in Palerang was valued at $1.9 million, with development approval for 16 housing lots, which was near completion. It sold for $140,000 last month." 93% loss

"...two vacant housing lots near Gosford on the NSW Central Coast were valued at $385,000 and $425,000 in October 2006..... sold at auction in December 2010 for just over $25,000 and $40,000, respectively." more +90% losses

Its hard to argue that property in Australia wasn't a bubble, when valuations were up to 900% higher than reality. I'd feel sorry for people who paid those high prices, if they weren't part of the problem. But the CEO of the RE valuation company has a great quote in his defense, which could apply to the entire property market in Australia:

"Anyone in that market, knowing how sick the market is and knowing they have a distressed sale on top of it, is going to be looking for an extremely good buy."

Yes, there is great money to be made in property in Australia. Just offer people a lot less than they're asking, and someone will eventually take it. Property isn't booming anymore, but desperation seems to be.

 

[satanoperca]

Where have all the bulls gone?

And why have the disappeared? hmmmmm I wonder

Anyhow, the housing shortage myth busted by who else by Residex.

No shortage, more like an oversupply. Isn't this the same pattern that the US went down.

housing shortage
falling house prices
rising unemployment
oversupply of homes
falling house prices etc etc etc

http://blog.residex.com.au/2011/07/26/june-qtr-residex-reports/

Melbourne currently has an oversupply of 26000 homes/apartments.

So we have a huge build up in inventory in Melbourne at the moment as well as an oversupply, only logical conclusion is house prices to the moon.

Feel for all those FHB that got suckered into the market in the last few years, no I don't. They should have done so valid research before committing themselves to debt slavery.

Cheers

 

[nulla nulla]

Where have all the bulls gone?

And why have the disappeared? hmmmmm I wonder

Anyhow, the housing shortage myth busted by who else by Residex.

No shortage, more like an oversupply. Isn't this the same pattern that the US went down.

housing shortage
falling house prices
rising unemployment
oversupply of homes
falling house prices etc etc etc

http://blog.residex.com.au/2011/07/26/june-qtr-residex-reports/

Melbourne currently has an oversupply of 26000 homes/apartments.

So we have a huge build up in inventory in Melbourne at the moment as well as an oversupply, only logical conclusion is house prices to the moon.

Feel for all those FHB that got suckered into the market in the last few years, no I don't. They should have done so valid research before committing themselves to debt slavery.

Cheers

You're a cheerful sod satan. Even if Melbourne has an oversupply, it isn't about to have a melt down like the u.s.a. (Who would want to live in a cold, wet and windy place like Melbourne anway )

Maybe all the Melbournites are moving to Qld again to take advantage of the drop in housing/apartments on the goldcoast and the sunshine coast.

 

[satanoperca]

I'm a happy sod there Nulla Nulla, just reporting the facts, I dont create them, just find them.

Please do explain why we cannot see a significant drop in Melbourne property prices.

To add just a little more :

Currently it takes 68% of the median after tax household income to purchase a median priced house in Melbourne. Yes 68%, I can see how we can get that up to maybe 85%, not. We are over indebted, have rising unemployment and a large build up of inventory, coupled with a defunct government and very uneasy international conditions.

By the way, where did all those Chinese investors go, maybe the same place as the shortage spruikers.

Cheers

 

[trainspotter]

I am breaking all my own rules by posting here. But it needs to be done.

The quotes about 68% DSR and 93% losses (due to foreclosure/bad management and not by choice) are isolated cases FFS !!!!!!!!! Mummy and Daddy are still happy little slaves to the bank and paying off their debt.

ABS stats over 8 capital cities is less than 3% across the board over a 12 month period. Never mind it went UP more than this prior..

Get a grip peoples. We are not seeing wholesale jingle mortgages and banks slumping due to non payment. FAR OUT !!!!!!!!!!!!!

No wonder I left this thread to it's own devices ......... go and slash your wrists NOW and avoid the rush.

Does anyone here that posts are ACTIVELY involved in property? Or are you all internet gurus? (Tech/a excluded of course)

moooooooooooooooooooooooooooooooooooooooooooooo

Medicowallet: This is considered a free hit. No correspondence will be entered into.

 

[medicowallet]

Medicowallet: This is considered a free hit. No correspondence will be entered into.

Sooooooooooooo tempting, but, pointless actually, goign to see some houses this weekend, just for the peace and quiet.

You could take solace in the wise words from Robots, if he would post between shifts

 

[medicowallet]

The quotes about 68% DSR and 93% losses (due to foreclosure/bad management and not by choice) are isolated cases FFS !!!!!!!!! Mummy and Daddy are still happy little slaves to the bank and paying off their debt.

b&b, mfs and abc were not really mum and dad shares, but consistently quoted, so I think fair is fair

 

[nulla nulla]

I am breaking all my own rules by posting here. But it needs to be done.

The quotes about 68% DSR and 93% losses (due to foreclosure/bad management and not by choice) are isolated cases FFS !!!!!!!!! Mummy and Daddy are still happy little slaves to the bank and paying off their debt.

ABS stats over 8 capital cities is less than 3% across the board over a 12 month period. Never mind it went UP more than this prior..

Get a grip peoples. We are not seeing wholesale jingle mortgages and banks slumping due to non payment. FAR OUT !!!!!!!!!!!!!

No wonder I left this thread to it's own devices ......... go and slash your wrists NOW and avoid the rush.

Does anyone here that posts are ACTIVELY involved in property? Or are you all internet gurus? (Tech/a excluded of course)

moooooooooooooooooooooooooooooooooooooooooooooo

Medicowallet: This is considered a free hit. No correspondence will be entered into.

Thank you Train Spotter. Melbourne is not about to have a ninja loan melt down with property values falling by up to 75%, now or in the future.
Unemployment rates are not going to 30% and the federal government (and opposition) incompetence is having negligible influence on property prices.
Banks are working with people that are experiencing problems with housing loan repayments and foreclosures are minimal as divulged in the bank reports and their provisioning.
Life goes on and "bricks and mortor" remain a very important, and viable long term investment.

 

[satanoperca]

Thank you Train Spotter. Melbourne is not about to have a ninja loan melt down with property values falling by up to 75%, now or in the future.
Unemployment rates are not going to 30% and the federal government (and opposition) incompetence is having negligible influence on property prices.
Banks are working with people that are experiencing problems with housing loan repayments and foreclosures are minimal as divulged in the bank reports and their provisioning.
Life goes on and "bricks and mortor" remain a very important, and viable long term investment.

I don't know what is worse, rampant bulls or bears in this thread.

Please point out where someone has stated falls of 75% and 30% unemployment. Talk about get a little excited, both you Nulla Nulla and T/H.

I provide links to a report, that report states and oversupply of housing in Melbourne and that the median household in the median house is paying 68% of their after tax income on paying off the mortgage.

Nothing to see hear folks, keep you head up ya arses and it will all go away or provide some contructive arguement instead of rants of crazy men.

Cheers

 

[Uncle Festivus]

It's still good to see that Australia is still different and immune from the rest of the world, even though, going by the latest data, the rest of the world is possibly back in recession?

As always, the proof of commitment to property is if the permabulls are actually still buying now? Are you??

 

[KurwaJegoMac]

As always, the proof of commitment to property is if the permabulls are actually still buying now? Are you??

Yep. My latest IP saw a tenant sign a lease at just above market rate after only 2 days on the market. This is after 8 applications on day 1.

Just gotta pick your suburbs well.

 

[Uncle Festivus]

Yep. My latest IP saw a tenant sign a lease at just above market rate after only 2 days on the market. This is after 8 applications on day 1.

Just gotta pick your suburbs well.

Yes, but what is your yield? It's all well & good buying at the top but if it's not paying it's way then....?

 

[greebly24]

In local Adelaide news, mate just offered $245k on $280k house (12.5% discount). RE Agent came round few hours later to make it official. You could almost smell the desperation.