The future of Australian property prices

[KurwaJegoMac]

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....?

Current yield, excluding any change in capital value is -0.77%. This includes, rent, maintenance and all operating fees and council rates.

Based on my current rate of savings, yield will be positive within 11 months.

Yields are based on total purchase price with stamp duty and not original capital invested.

 

[medicowallet]

"The clearance rate this weekend is 59 per cent, compared to 56 per cent last weekend and 73 per cent this weekend last year.

This weekends result is consistent with the past three months in which the monthly clearance rate has been 55 per cent.

There were a total of 409 auction results reported this weekend of which 242 sold and 167 were passed in, 107 of those on a vendors bid.

There will be a small lift in stock next weekend with 615 auctions expected"

Soooo, 500 predicted for this weekend, 409 reported.. under reporting or the RE agents losing faith??

Why has the clearance rate remained so low so long?
When will it pick up?
What impact on price has this had?

Why so few auctions compared to last year when inventories are so much higher?
How many RE are there working this year?
Are they still full time or part time?

Where is Robots?


For all these answers and more, tune in to Bulls vs Bears, this month (and next etc), exclusive to ASF.

Sunshine, lollipops and slightly smaller bubbles

MW

 

[Uncle Festivus]

Current yield, excluding any change in capital value is -0.77%. This includes, rent, maintenance and all operating fees and council rates.

Based on my current rate of savings, yield will be positive within 11 months.

Yields are based on total purchase price with stamp duty and not original capital invested.

So would you be willing to name the suburb or postcode so we can keep tabs on the price increase over the next 12 months??

 

[Uncle Festivus]

Where is Robots?

For all these answers and more, tune in to Bulls vs Bears, this month (and next etc), exclusive to ASF.

Sunshine, lollipops and slightly smaller bubbles

MW

Apparently Professor Robots is on consignment from the University and is doing the lecture circuit in the US on how to solve their real estate bust.

 

[KurwaJegoMac]

So would you be willing to name the suburb or postcode so we can keep tabs on the price increase over the next 12 months??

Knock yourself out: Noble Park (3174)

 

[FxTrader]

Knock yourself out: Noble Park (3174)

Prosper Australia has made a prediction on the Melbourne market (postcodes 3000-3207) based on rising stale stock levels in "Prosper affirms ‘Don’t Buy Now!’ warning"...

"Melbourne will be the epicentre for foreclosures and price falls because we have overbuilt by so much," Prosper Australia spokesman David Collyer warned.

"We expect harsh price corrections in the newly built outer suburbs. I know it's unhappy news for a lot of people, but it's better they hear the truth."

Housing Industry Association chief economist Harley Dale said Melbourne was the country's most at-risk property market.

http://www.prosper.org.au/2011/08/18/prosper-affirms-%E2%80%98don%E2%80%99t-buy-now%E2%80%99-warning/

Some interesting excerpts...

• ‘Stale Stock’ on the market in Melbourne is growing exponentially
• The sheer volume of unsold property is now indigestible
• Recent price falls must accelerate

“We confirm our earlier warning to prospective homebuyers – those entering the market or trading up to more valuable properties – to stand aside as prices fall,” Prosper Australia Campaign Manager David Collyer said today. “Your buying will not arrest this powerful economic trend.

“Anyone purchasing at current price levels will suffer very substantial capital losses over about the next six years. Those who rely on a large mortgage will likely plunge into negative equity, where the property is worth less than the loan it supposedly supports."

“In the last four months ‘Stale Stock’ in Melbourne postcodes 3000-3207 has doubled, ballooning from 19,800 to 38,522. In the wider Melbourne and environs, 60,253 houses have been on the market for more than 6o days and remain unsold."

“Buying has simply dried up. A couple with two good incomes and a solid deposit cannot afford these prices.

“New construction has slowed to a crawl because of the unsold stock. This means widespread layoffs in the building trades as projects are completed and new starts deferred,” Collyer said.

“We are entering the spring selling season when property is brought to market in volume. With this ‘Stale Stock’ already overhanging, prices must change.

“Across Australia, homeowners have eagerly bought the story property is wealth and prices can only rise, inflating the market price of Australian land to a ridiculous $3.5 trillion. Unfortunately, these values have been built on debt and we face difficult times as this frenzy is unwound.”

As a counter Residex says...

"Residex chief executive John Edwards said Melbourne was oversupplied, but would avoid a crash. Mr Edwards, who has monitored the country's property market for more than 20 years, estimates Victoria had an oversupply of about 24,000 dwellings.

"The majority of that is in medium and high-density developments, and a significant proportion of that is in Melbourne," he said."

If the Prosper prediction comes to pass then a young couple who just bought a house in our neighborhood (3156) for $25k over the reserve at auction (and I thought the reserve itself was $25k to high!) will be very dissappointed indeed.

I think Edwards is more likely to be correct for the moment. I have been looking at houses in Melbourne's east now for over a month and monitoring sales. Poor quality homes are going stale but well presented homes in good neighborhoods are still selling at or above the top of their price range. The traditional spring glut of houses going to market should be a gauge of where the market is headed price wise.

 

[Aussiejeff]

Looks like The Block auction failures - even with grossly "underquoted" values failing to attract bids - are a reflection of the true RE market sentiment at the higher end?

UNDERDOGS Polly Porter and Waz Jones have won The Block because they were the only contestants to sell their house at auction.

The much-hyped grand finale hosted by Scott Cam proved an utter fizzer with three of the four Richmond houses falling well-short of what had been considered very conservative reserve prices.

It could be weeks before a deal is stuck on the three remaining properties.

The auction debacle is also huge blow to Channel 9 and Watercress Productions - which reportedly shelled out $3.6 million for the rundown Cameron St houses.

They anticipated a very different ending to the runaway hit series after thousands of potential buyers turned up to the open-for-inspection days.

The disappointing result also comes on the heels of a Consumer Affairs Victoria investigation into the four agents marketing the properties - Hocking Stuart, Biggin & Scott, Woodards and Jellis Craig - amid suspicion of under-quoting.

Read more: http://www.news.com.au/entertainmen...on/story-e6frfmyi-1226119267456#ixzz1VhUd38l2

Oh well. As long as the ratings were ok. Where to for median to high end RE from here??

aj

 

[KurwaJegoMac]

If the Prosper prediction comes to pass then a young couple who just bought a house in our neighborhood (3156) for $25k over the reserve at auction (and I thought the reserve itself was $25k to high!) will be very dissappointed indeed.

I think Edwards is more likely to be correct for the moment. I have been looking at houses in Melbourne's east now for over a month and monitoring sales. Poor quality homes are going stale but well presented homes in good neighborhoods are still selling at or above the top of their price range. The traditional spring glut of houses going to market should be a gauge of where the market is headed price wise.

Good articles, both present valid points. The South-East has a lot of stale properties on the market, many of which are unfavourably largely due to the sheer amount of development occuring in the area. For example, i wouldnt want to touch townhouses and units in Noble Park, the rate of development of these types of dwellings in the last 2 years has been phenomenal. Driving through i can see even more land being cleared and prepared for townhouses. Even so, they're getting snapped up quickly for now but they've hit a price point almost on par to a 30yr old 3 br house on 550 land. Dont know if thats similar in the East?

Good quality houses are gettin snapped up but there is a growing glut of poor properties - this will pit pressure on prices for sure. You can see the sentiment shift of the buyers, people aren't rushing out to buy anything that lists no matter the quality. While this is the way it should be, it could be a herald of darker days so one must be cautious.

What are your thoughts on the East based on your research?

 

[FxTrader]

What are your thoughts on the East based on your research?

We've been attending opens across a few suburbs out here in eastern Melb and monitored sales for the last month or so in search of another PPOR. The pulse of the market out here seems to be that well presented homes in desirable neighbourhoods are getting a lot of attention and attracting top prices in their price range, anything else stays on the market for awhile and gets price adjustments. Buyers are picky but not that price sensitive if the property is a good one. For example, one well presented property had 60 groups through on the weekend while another in the same area in the same price range had about 10.

Of the suburbs we monitor, Pakenham, Cranbourne and Dandenong sales look under pressure with a lot of unsold stock going stale. Still a lot of development activity going in these suburbs and surrounds keeping prices down.

Suburbs like Rowville, Ferntree Gully, Upwey and Lysterfield are still attracting buyers for well presented properties. But spring will likely see a glut of properties hit the market in these suburbs a put some downward pressure on price expectations.

 

[medicowallet]

Apparently Professor Robots is on consignment from the University and is doing the lecture circuit in the US on how to solve their real estate bust.

I can just imagine his rally

"there is no bust, there is no bust, if you say it enough, there is no bust!"

 

[maffu]

Looks like The Block auction failures - even with grossly "underquoted" values failing to attract bids - are a reflection of the true RE market sentiment at the higher end?



Read more: http://www.news.com.au/entertainmen...on/story-e6frfmyi-1226119267456#ixzz1VhUd38l2

Oh well. As long as the ratings were ok. Where to for median to high end RE from here??

aj

I didn't watch the TV show, but I think they paid 900k each for the houses, and spent 100k on renovations, so 1mil for each property.

The winner sold for 855k, and I heard that one of the properties sold after auction for 860k.
What were the other 2 properties advertised at?

Seems like a very big loss considering how much publicity they got for the apartments...

 

[banco]

I've read in a few places that the US property bubble produced quite a lot of real estate reality TV. Of course that's all gone now....

Good to see the spivs could only find a sucker for one of the four apartments.

 

[KurwaJegoMac]

Of the suburbs we monitor, Pakenham, Cranbourne and Dandenong sales look under pressure with a lot of unsold stock going stale. Still a lot of development activity going in these suburbs and surrounds keeping prices down.

I've seen the same, although can only comment for Dandenong. It is definitely slowing down, but its been a crazy couple of years since the Government revitilisation project, $200m+ in upgrades. Prices I think have reached their saturation point - a lot of the new precint has already been sold and there's a lot more coming just south of Dandenong towards Keysborough. I see townhouses in that area currently at a premium and I'm expecting them to go down - sales have most definitely slowed. In general though I think surrounding suburbs are behind the curve and have a bit more to go (perhaps 1-2 years) as Dandy is at a premium atm.

Suburbs like Rowville, Ferntree Gully, Upwey and Lysterfield are still attracting buyers for well presented properties. But spring will likely see a glut of properties hit the market in these suburbs a put some downward pressure on price expectations.

Agree on this - I've been looking at Rowville in particular as this is my #1 personal pick for a PPOR at the moment. I have a close mate who works as an agent in the area and he says quality stock is flying out the door, but the less presentable ones are going very stale. He says a big issue is that there is a glut of vendors with highly unrealistic expectations - he gave one example of two similar sized homes in the same street on the market within 6months of one another. The first (which sold) at $480k was newly renovated and immaculate inside. The other one (stale for the last 3 months) still has original furnishings and is in bad need for some TLC - vendor refusing to take anything less than $500k.

 

[medicowallet]

I didn't watch the TV show, but I think they paid 900k each for the houses, and spent 100k on renovations, so 1mil for each property.

The winner sold for 855k, and I heard that one of the properties sold after auction for 860k.
What were the other 2 properties advertised at?

Seems like a very big loss considering how much publicity they got for the apartments...

idk what they are advertised at,

But if I knew the "reserve" I sure as heck wouldn't be going in and offering $100k more than that now.

I feel sorry for the contestants who walk away with nothing for putting 10 or so weeks of full time work..

A sign of things to come,

I also notice that either june or July (can't remember) went down 1.6% for the month... where is Robots again? Quite a few of Rudd's suckers will have lost 3-5%+ in that month alone on a 1.6% fall..

Will they start rushing for the exit?

 

[skc]

Looks like The Block auction failures - even with grossly "underquoted" values failing to attract bids - are a reflection of the true RE market sentiment at the higher end?

I've only watched a few episodes of the show but it seemed like they are doing it the wrong way. They ask people to renovate, then come up with a reserve price based on the renovations done, and the winner is the couple who makes the most money above the reserve...

So in essence, you are penalised for your good renovating work by the higher reserve. The better you renovate, the more you are disadvantaged and the harder it is for you to win the show.

They should have just come up with a "price point" that is based on the location and a plain vanilla home of that size, before all the renovations are done. The winner will then be whoever beats that price point by the largest amount.

The auction reserve price is another matter altogether and should not be used to determine the winner imo.

It is just a TV show I supposed. And frankly it is silly trying to buy a property on a TV show, as if the usual auction process isn't tough enough.

 

[notting]

Reserves should have been what nine paid for them plus renovation costs. Who ever did best out of that wins even if it was a loss. Nine probably paid too much to begin with to get the format right for the show. Hardly a reflection of the property market.

 

[tech/a]

Whole things a joke.
What people call entertainment never ceases to amaze me.

Its ONLY purpose is the fill 9s pockets with cash.
It does that-----
If you like watching paint dry and you love
pregnant pause suspense---your nights will be
choka block --pun--full.

 

[notting]

choka block --pun--full.

LOL

 

[Glen48]

These type of shows have a lot to answer for in helping the Housing boom/bust convinced sucker R. E never fails now they need to do a show called Australia's biggest looser's and show how the economy works in real life

 

[medicowallet]

These type of shows have a lot to answer for in helping the Housing boom/bust convinced sucker R. E never fails now they need to do a show called Australia's biggest looser's and show how the economy works in real life

The melbourne market has fallen over the last 6 months.
The auction clearance rates are shaky at best.

Such a high profile show, could be a tipping point (unlikely, but such a fragile setup, with such devastating results)

If I were a mega rich RE group, I would be teaming up with other groups and offering at least $100k over reserve for the final 2 houses and make a big hooplah over it all.