The future of Australian property prices

[ROE]

As long as those thousands have money or a need for your good's it will be ok but if banks start to foreclose and you are trying to sell on a tanking market it will all implode.

capitalism isn't bad
debt isn't bad

these are just ideas, system and instruments.

it is the individual that use them that is the problem...

human greed, excess is the problem not the instruments

and there are countless example of this written into history books
and there will many more in the future.

 

[lurker123]

Watch this RSA animate clip on drive:
http://www.youtube.com/watch?v=u6XAPnuFjJc&feature=player_embedded#!
What studies show is that in simple repetitive tasks, higher pay does = better performance, however once a task becomes more complex this is not the case.

From wikipedia about one of the greatest minds, Nikola Tesla: "He ripped up a Westinghouse contract that would have made him the world's first billionaire, in part because of the implications it would have on his future vision of free power, and in part because it would run Westinghouse out of business, and Tesla had no desire to deal with the creditors."

True a lot of people will do nothing everyday, in fact a lot of people on the dole already do nothing everyday. However there are also a lot of people who do things for no reward e.g. the huge number of free open source computer programs.

Capitalism is remarkably similar to evolution. A simplistic view of evolution is that individuals most suited to their environment will survive to pass on their genes to future generations. In capitalism those most suited to it will be well off whereas others will fail. Those who are wealthy can pass on their wealth to their offspring. We also have compounding interest e.t.c. Due to this reason, maybe capitalism is the best and only system for mankind before we annihilate ourselves.

 

[Mrmagoo]

You really are a bitter little man aren't you

Oh well I wish you the best, You are going to have trouble getting anything good in life with that lousy attitude,

All I will say is that the economy is not a cake where if one person gets rich it means they have a bigger slice and some one else will miss out.

The economy is more akin to candles, where we all work to light each other candles.

If I use my candle to light your candle I am not dimished anyhting and you have light,

But if your sitting there complaining and moaning no one is going to want to light your candle.

Sorry I didn't work hard to be born to a well off family and work hard enough to be born old enough to buy property when it was dirt cheap.

 

[Mrmagoo]

what percentage of the population do you think are in this position,

26% of people rent,
30% of people own their home with no debt,

that leaves 44% with debt against a house, and the average LVR is 50%, So maybe only 5% of people have high levels of debt against their home,

And out of those 5%,... 95% of them are employed, So probably less than 1% of the population are in danger,

But that 1% do happen to be the ones paraded on today tonight as representing "Normal" so I guess I forgive you for thinking that every one is hurting.

Ok so what, that means nothing, then the other 70 lose money or don't buy houses when prices crash. Hhmm if I was paying off 400k on something only worth 300k then yeah I'd call that trouble and if it were 550k vs 300k I'd probably declare myself bankrupt.

 

[young-gun]

Sorry I didn't work hard to be born to a well off family and work hard enough to be born old enough to buy property when it was dirt cheap.

i wasn't born into a well off family, nor was i born at a time to buy property dirt cheap, these dont excuse your absolutely pathetic attitude and comments like "i hope kids go hungry and families lose everything".

either bring something constructive and argumentative in an appropriate way or dont bother.

 

[explod]

For those still thinking that a collapse in property cannot happen to us then the following gives some disturbing trends in our economy that are going to have impacts on r/e in my view.

http://seekingalpha.com/article/394831-an-epic-australian-bust

 

[ROE]

For those still thinking that a collapse in property cannot happen to us then the following gives some disturbing trends in our economy that are going to have impacts on r/e in my view.

http://seekingalpha.com/article/394831-an-epic-australian-bust

predict the future is a mug's game because the market can stay irrational longer than you can stay solvent.

This is just one more added to the tally until such time if and when the bubble burst ..it could be 1 years, it could be 10 years, it could be 100 years

It been 4-5 years since Steve Keen predict the doom day scenario, when will he get it right? another 5? another 2? another 10? or when he's in his 90's and crashing or not doesn't really matter

 

[Glen48]

Its not going to happen over night but it will happen...The USA bubble has been leaking for 5 yrs and still expelling sub prime hot air .. the OZ one has just found key hole leak and getting under way..
Thanks to the FEDS all over the World the bubble gum is working to a degree and slowing things down and dragging it out.

Call back next years and see how far down the bubble has gone.

 

[Starcraftmazter]

It been 4-5 years since Steve Keen predict the doom day scenario, when will he get it right? another 5? another 2? another 10? or when he's in his 90's and crashing or not doesn't really matter

Have you heard about the FHOB? Seriously, some people here...

 

[Tysonboss1]

Have you heard about the FHOB? Seriously, some people here...

Yeah I heard about it back in 2002, Long before steve predicted the crash.

 

[Starcraftmazter]

Yeah I heard about it back in 2002, Long before steve predicted the crash.

Given that you are talking about the FHOG when I mentioned the FHOB, I presume you have not

 

[Klogg]

As far as I'm concerned, Steve Keen keeps predicting the same thing over and over until it actually happens...

I can see the logic in it (and agree to an extent), but repeatedly predicting the same thing and shifting your timelines doesn't make you an expert by any means.

 

[McLovin]

Yes, several years of growth has brought in some sloppy speculaters who think they are sophisticated investors, The market has a why of routing out the gamblers.

I don't know about that, I mean net rental income in Australia is something like negative $6b/annum which says to me most people are expecting capital growth and foregoing current income.

Again I wouldn't call those people investors to start with, and the same can be said for alot of people in share investments,

No arguments from me there, the difference of course being that sharemarket is dominated by sophisticated investors (instos, FM's and the like). Residential property, AFAIK, is not.

 

[ROE]

Given that you are talking about the FHOG when I mentioned the FHOB, I presume you have not

I dont need to know a lot of stuff to know..

that Seriously NO ONE can predict the future, timing is everything
with prediction.

I can now claim the market will go through another crash with 100% certainty
but WHEN? that is the key ....

I remembered it when price start to decline in 2008/2009 and they
predicting doom day in 2010 - 2011, 2010 and 2011 gone and they came
out claiming interference by government to prop up price as
an excuse ...

well that is the nature of the game isn't it? you cant predict the
future whether it's help from the government, printing money etc... if
it doesn't goes your way blame it on some other forces, if it does you are the
clever one ...

now it's on to 2012 and 2013 until it comes true and someone will
jump out and said I told you so.

Bust will come EVENTUALLY and some will claim to fame and other will
just disappear into the abyss.

I'm a net buyer of asset, cheaper price is always good... I got so
much free cash flow each month

I dont know what to do with...I prefer to buy cheap asset than
expensive one but I'm not about to go

on predicting doom day or Irrational exuberance because I know the
outcome of that already.

People need to spend less than they bring in and they never run out of
money EVER and after a while you have so much free cash flow you dont
know what to do with...

dead simple concept but being human we have to go and invent something
more complex and more costly to try and beat a simple concept

boom and bust will eventually come does it really matter...

and here is something written decades ago in 1994 by some famous investor
price at the time of his writing $10,083, today price $119,265.00.

Can some predictor of doom put out the same record

We will continue to ignore political and economic forecasts,
which are an expensive distraction for many investors and
businessmen. Thirty years ago, no one could have foreseen the
huge expansion of the Vietnam War, wage and price controls, two
oil shocks, the resignation of a president, the dissolution of
the Soviet Union, a one-day drop in the Dow of 508 points, or
treasury bill yields fluctuating between 2.8% and 17.4%.

But, surprise - none of these blockbuster events made the
slightest dent in Ben Graham's investment principles. Nor did
they render unsound the negotiated purchases of fine businesses
at sensible prices. Imagine the cost to us, then, if we had let
a fear of unknowns cause us to defer or alter the deployment of
capital. Indeed, we have usually made our best purchases when
apprehensions about some macro event were at a peak. Fear is the
foe of the faddist, but the friend of the fundamentalist.

A different set of major shocks is sure to occur in the next
30 years. We will neither try to predict these nor to profit
from them. If we can identify businesses similar to those we
have purchased in the past, external surprises will have little
effect on our long-term results.

 

[Starcraftmazter]

well that is the nature of the game isn't it? you cant predict the
future whether it's help from the government, printing money etc... if
it doesn't goes your way blame it on some other forces, if it does you are the
clever one ...

No it's actually quite easy;

1. Aussie property is the biggest property bubble in the world.
2. This bubble has now lived it's course with the global credit bubble bursting.
3. The government will try this and that to prop it up - but in the end it will fail, and whatever pauses the government will manage to engineer will be nothing but a blip on a longer term (say 10 year) outlook.

No government is powerful enough to overcome market forces - this is not possible.

Therefore, house prices will continue fall. And they will accelerate in falls as negatively geared speculators and the newly retired pull out.

Demographics drive long-term boom and bust cycle - they have since the dawn of time. This is no magic and it is definitely, 100% predictable.

 

[Klogg]

No it's actually quite easy;

1. Aussie property is the biggest property bubble in the world.
2. This bubble has now lived it's course with the global credit bubble bursting.
3. The government will try this and that to prop it up - but in the end it will fail, and whatever pauses the government will manage to engineer will be nothing but a blip on a longer term (say 10 year) outlook.

No government is powerful enough to overcome market forces - this is not possible.

Therefore, house prices will continue fall. And they will accelerate in falls as negatively geared speculators and the newly retired pull out.

Demographics drive long-term boom and bust cycle - they have since the dawn of time. This is no magic and it is definitely, 100% predictable.

Referring to the bolded part - how can you be certain? What if we just have an endless circle of one institution propping up others (e.g. ECB lending to european banks, or even China coming in and lending to Europe)?
How long can that go on for before we finally see a 'collapse'?

And remember, we've seen many countries default before... That alone won't cause the doomsday that some are predicting.
Take a look at Argentina - they default just over 10years ago and are quite strong now...

Don't get me wrong, I can understand the reasoning behind your arguments and agree to some of the points, but history and a little level thinking tell me it's not as bad as people make it out to be.

 

[Glen48]

What happens in USA we follow about 5 yrs later their property started to tank 2007 -08 add 5 yrs and we are in line.
Every 75-80 there has been a depression just long enough for the old to some times remember and the young to know nothing about.
Add 75-80 yrs 1930 and we are now due but Big Ben is holding on fighting so prolonging the pain.
Once house prices are seen dying by the Home and Away fans all will panic and the house of cards will blow away.
Take the first offer or any offer and get out now.

 

[Klogg]

What happens in USA we follow about 5 yrs later their property started to tank 2007 -08 add 5 yrs and we are in line.
Every 75-80 there has been a depression just long enough for the old to some times remember and the young to know nothing about.
Add 75-80 yrs 1930 and we are now due but Big Ben is holding on fighting so prolonging the pain.
Once house prices are seen dying by the Home and Away fans all will panic and the house of cards will blow away.
Take the first offer or any offer and get out now.

I can see your point, but think of it like this...

If house prices were to fall by 40-50%, then you're looking at a rental return of b/w 9-11% on some properties in areas around me (inner-west Melbourne).
I understand that rents would fall slightly, but with rental vacancies around the 3% mark and immigration in Australia still fairly strong, I don't see how:

- Rents would drop significantly; and following this,
- how property prices would plunge to allow for anything close to a 10% return

I can still see another possible 5-10% drop, but the potential figures that are being thrown out of 30-50% seem somewhat over the top.

 

[medicowallet]

I can see your point, but think of it like this...

If house prices were to fall by 40-50%, then you're looking at a rental return of b/w 9-11% on some properties in areas around me (inner-west Melbourne).
I understand that rents would fall slightly, but with rental vacancies around the 3% mark and immigration in Australia still fairly strong, I don't see how:

- Rents would drop significantly; and following this,
- how property prices would plunge to allow for anything close to a 10% return

I can still see another possible 5-10% drop, but the potential figures that are being thrown out of 30-50% seem somewhat over the top.

1. If unemployment rises, immigration will slow.
2. If unemployment rises, rents will fall in line with decreased income, which could be significant.
3. If unemployment rises, young people move back home / families move in with each other / share houses become more prevalent.


Still think housing only will go to 20% fall from peak.. how long? who knows, but it must not be picking up (last 2 months reported today = flat) as Robots is still silent (read: working)

MW
PS Where is Robots.

 

[RandR]

Have signed a contract at the start of this week to purchase a PPOR (our first home).

Were not worried. LVR is 75%.

The current principal and interest repayment is going to be about 400ish a week (pretty much the same price as rent).

If one of us is out of work, we will still be able to make repayments.

Were almost smack bang between brisbane and the gold coast, only about 25km to brisbane cbd and similar to gold coast cbd. Short walk to trains and new shops and backs onto a large park ! house is a simple but neat and tidy 3b brick and tile home thats only 12yr old, on a decent 700sq block.

I think people are overhyping the 'omg itz a mega housing bubble' thing a bit much ...

We are just to avg wage people - im 24 my partner is 22 and have a combined income of just 100k, and we can quite capably afford this property ...

so ... err .. take that doomsayers.

The only thing im dissapointed about is ive sold all my stock ! Now just going to concentrate solely on smashing this non tax deductible mortgage.