The future of Australian property prices
- Thread starter Joe Blow
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+1 explains beautifully why prices can't keep compounding, like they have in the last 10 years.
Great link Roe.
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that old bloke was Julius Sumner Miller right? "why is it so?"
hello,
no time for any of that stuff explod, i have been busy trying to put bent coppers away
never ending, oh well might look into the shed and caravan next week
thankyou
professor robots
explod
explod
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Yep, they put me out of a job, but you and I will overcome that.
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I have just been trying to model the proposition of
1) selling the house you live in, putting x% of the proceeds into shares (in super), rest in cash, and renting somehwere to live
versus
2)the status quo of keeping house
this particular model ignores the cash flow situation (which is roughly neutral as I dont count any income from the super, its just left to compound up) and seeks to establish which stategy would leave me better off after ten years in terms of net worth, under various growth scenarios (including negative growth) for both asset classes. Why 10 years? - happens to suit my circumstances
the selling the house strategy pretty much dominates over most reasonable scenarios, but i have to admit in most of my 'reasonable scenarios' I cant see shares doing worse, or much worse than house values. That is, if we are going to live in a world where (aust) shares decline some more over the next few years (a possibilty to be sure) then for sure house prices arent going up, and are probably going down. On other hand if house prices do stabilise here or even go up mildly, that would imply the end of the world/europe hdoesnt come to pass, then the most likely scenario for shares would be a sustained rally back to more normal P/E ratios.
If house prices crash 40% i have to assume shares suffer badly as well but since we are deleveraged by only having x% exposed it would be pretty much impossible to lose more than 40% of the value of a house. If by some miracle House prices immediately return to long term trend growth at say 7% then happy days are obviously here again and surely shares have to do at least as well if not far better right?
The trouble with all this is I am pretty much assuming a positve correlation between the two assets, or at least that HP cant outperform shares, so obviously the model is going to confirm that bias.
Turns out strategy 1) can only be a bad mistake v strategy 2) if house prices return to growth in the short term AND shares dont at least keep pace with that growth. So how likely is that?
So the question for the panel is;
Can anyone outline a scenario where house prices could significantly outperfom shares, lets say over a more than a short term 1 year view?
1) selling the house you live in, putting x% of the proceeds into shares (in super), rest in cash, and renting somehwere to live
versus
2)the status quo of keeping house
this particular model ignores the cash flow situation (which is roughly neutral as I dont count any income from the super, its just left to compound up) and seeks to establish which stategy would leave me better off after ten years in terms of net worth, under various growth scenarios (including negative growth) for both asset classes. Why 10 years? - happens to suit my circumstances
the selling the house strategy pretty much dominates over most reasonable scenarios, but i have to admit in most of my 'reasonable scenarios' I cant see shares doing worse, or much worse than house values. That is, if we are going to live in a world where (aust) shares decline some more over the next few years (a possibilty to be sure) then for sure house prices arent going up, and are probably going down. On other hand if house prices do stabilise here or even go up mildly, that would imply the end of the world/europe hdoesnt come to pass, then the most likely scenario for shares would be a sustained rally back to more normal P/E ratios.
If house prices crash 40% i have to assume shares suffer badly as well but since we are deleveraged by only having x% exposed it would be pretty much impossible to lose more than 40% of the value of a house. If by some miracle House prices immediately return to long term trend growth at say 7% then happy days are obviously here again and surely shares have to do at least as well if not far better right?
The trouble with all this is I am pretty much assuming a positve correlation between the two assets, or at least that HP cant outperform shares, so obviously the model is going to confirm that bias.
Turns out strategy 1) can only be a bad mistake v strategy 2) if house prices return to growth in the short term AND shares dont at least keep pace with that growth. So how likely is that?
So the question for the panel is;
Can anyone outline a scenario where house prices could significantly outperfom shares, lets say over a more than a short term 1 year view?
Glen48
Money can't buy Poverty
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check your nick and buy gold silver
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yeah forgot strategy 3) ; sell house and invest proceeds in an asset that returns nothing, has no fundamental value, whose price fluctuates driven by only speculation and sentiment and has seen an exponential growth curve to put property to shame.
that should work
explod
explod
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yeah forgot strategy 3) ; sell house and invest proceeds in an asset that returns nothing, has no fundamental value, whose price fluctuates driven by only speculation and sentiment and has seen an exponential growth curve to put property to shame.
that should work
Speculation you say.
Money printing and its dilution is going to the moon and to the core of the earth.
Gold an silver will continue its trajectory whilst the QE continues. Now the Federal Reserve is holding most of the world strings the money dilution will bring about the Wiemer Rupublic result onto the world stage. Your title deeds and cash will be wallpaper.
Those of us who looked economics in the eye and got onto p/m's have done well over the last eight or nine years, in fact very well. However there is still time to learn and get on board as in my view we aint seen nothin yet.
And I will be ready to buy property when we hit nothin.
Glen48
Money can't buy Poverty
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Looks like a Robots understudy has come on board, wanta buy a hose go to Ireland they have 300 K new vacant they cant sell, don't like Ireland try Spain before the council knocks down the new never lived in houses because the council can't afford the upkeep, don't like those two go to USA were every second home owner is under water start up a business hiring out Ex US postal service vans once they fold to all the un-employed home less to live in for years to come.
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Well something interesting happened today, was talking to someone about the amount of empty new apartments in the area (trendy, holiday, seaside) .
She said, well funny you should mention that a couple of tradies she knows, have bolted.
Signed up for $800k off the plan, at auction they are going for $400k, well they have done a runner.
Best of luck with that idea, eventually they catch up, usually that's when mum and dad have to step in.LOL been there done that, thankfully on a much smaller scale, thank god they learnt.
This is obviously starting to get messy.
She said, well funny you should mention that a couple of tradies she knows, have bolted.
Signed up for $800k off the plan, at auction they are going for $400k, well they have done a runner.
Best of luck with that idea, eventually they catch up, usually that's when mum and dad have to step in.LOL been there done that, thankfully on a much smaller scale, thank god they learnt.
This is obviously starting to get messy.
rich getting richer, poor struggling
this news is a bit old....but I thought it is a timely reminder....for some to ponder, over the coming weeks....
whilst the world waits and watches as the Euro keeps destroying themselves....and the banks shiver, or are they panicking now.....and the stockmarket gyrates on a daily basis
..................................................
Their wealth has increased just 4 per cent since 2005-6, compared to the richest 20 per cent of households, where the average net worth has risen 15 per cent.
The top 20 per cent have an average of $2.2 million per household and account for about two-thirds of the nation's total household wealth, the ABS figures show.
The average wealth of an Australian household in 2009-10 was $720,000, up 14 per cent in the last five years.
The family home was the biggest contributor to household wealth. About 2.7 million households owned their home outright, with an average value of $541,000. For those with a mortgage, the average house value was $521,000 with an average mortgage of $188,000.
...........................................................
http://www.theaustralian.com.au/new...r-are-struggling/story-e6frg6nf-1226166633412
*******please note the averages....
For those with a mortgage, the average house value was $521,000 with an average mortgage of $188,000.
not hocked to the hilt at all.....they are actually sitting pretty...
these figures are based on facts.....
not what your neighbour, friend, mate told you...
enjoy
--------------------------------------------------------------------------------
the billionaires have taken a huge hit in fortunes
this list will make you feel better....for eg; James Packer has lost almost half his fortune
but that can happen when the kids inherit it all from wealthy parents....the parents save...the kids spend....
http://www.crikey.com.au/2011/11/28/the-billion-dollar-blues-how-the-gfc-hit-our-richest
this news is a bit old....but I thought it is a timely reminder....for some to ponder, over the coming weeks....
whilst the world waits and watches as the Euro keeps destroying themselves....and the banks shiver, or are they panicking now.....and the stockmarket gyrates on a daily basis
..................................................
Their wealth has increased just 4 per cent since 2005-6, compared to the richest 20 per cent of households, where the average net worth has risen 15 per cent.
The top 20 per cent have an average of $2.2 million per household and account for about two-thirds of the nation's total household wealth, the ABS figures show.
The average wealth of an Australian household in 2009-10 was $720,000, up 14 per cent in the last five years.
The family home was the biggest contributor to household wealth. About 2.7 million households owned their home outright, with an average value of $541,000. For those with a mortgage, the average house value was $521,000 with an average mortgage of $188,000.
...........................................................
http://www.theaustralian.com.au/new...r-are-struggling/story-e6frg6nf-1226166633412
*******please note the averages....
For those with a mortgage, the average house value was $521,000 with an average mortgage of $188,000.
not hocked to the hilt at all.....they are actually sitting pretty...
these figures are based on facts.....
not what your neighbour, friend, mate told you...
enjoy
--------------------------------------------------------------------------------
the billionaires have taken a huge hit in fortunes
this list will make you feel better....for eg; James Packer has lost almost half his fortune
but that can happen when the kids inherit it all from wealthy parents....the parents save...the kids spend....
http://www.crikey.com.au/2011/11/28/the-billion-dollar-blues-how-the-gfc-hit-our-richest
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As I live and breathe ! Living in my 400m2 home overlooking the ocean is a terrible crime. Moet on the balcony as the sunset goes down. Sarantos soft pressed Chardonnay with my seafood for dinner followed by Chivas Regal in the den for desert. I can actually watch the crayfish crawl into my pots from here.
Knowing full well my rental properties are paid in advance ..... Awful thing to happen.
Whatever you do ..... don't invest in real estate .... there is no money in it.
Bwahahaahhahahaaaaaaaaaaa
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Jeez, trainspotter, I'll stay at your place when I come through Geraldton, next winter.LOL
I'll help you get through some of that bubbly, take the pressure off your your liver for you.
I'll help you get through some of that bubbly, take the pressure off your your liver for you.
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Jeez, trainspotter, I'll stay at your place when I come through Geraldton, next winter.LOL
I'll help you get through some of that bubbly, take the pressure off your your liver for you.
You are most welcome !
Julia
In Memoriam
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Wow, trainspotter, what a friend is sptrawler, huh! Such immense self sacrifice.Jeez, trainspotter, I'll stay at your place when I come through Geraldton, next winter.LOL
I'll help you get through some of that bubbly, take the pressure off your your liver for you.
Hi All
I have a dilemma.
Very close to buy PPOR on Sydney's northern beaches, seller has come down in price but the last $30000.00 I want him to come down is going to be difficult.
1) Should I accept he's price
2) Wait for next year hoping he will not sell to another party "dont think he has somebody else interested"
I have a dilemma.
Very close to buy PPOR on Sydney's northern beaches, seller has come down in price but the last $30000.00 I want him to come down is going to be difficult.
1) Should I accept he's price
2) Wait for next year hoping he will not sell to another party "dont think he has somebody else interested"
explod
explod
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If you really want the property, have your interest noted and wait. With the talk even in the press of property values falling he will come around to it. If he is reducing the price as is indicated then he needs to get out.
If you do not need this property I would wait a couple of years to see how far the knife is going to fall.
But you are the only judge, the above is just what I would do.
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Just remember, you dream property comes about once a week.....With rising supply and falling prices there's no rush IMO
