The future of Australian property prices

[Miss Hale]

havent seen that particular show, but I used to do that in blighty in the good old days when property was cheap and returns justified the investment, whether you were selling or renting out.

as mentioned earlier in this thread, i have just sold house here (perth), and was looking around to rent, astonished at how quickly rents were shooting up (can you have a bubble in rent prices?)

I don't think so to the same extent because people don't borrow to pay their rent so ther is a limit to what they will pay. Rents are dropping fraction over here I think (Melbourne) but they are still a bit high IMO.

then on the net i came across a 6 bedroom house in a village near the wifes home town in england, for rent at one quarter of the price it would cost me to rent a 4 bed here. so we're off back to blighty for a while to check out whats happening. pehaps i will find a 55 room hotel to buy?

as an aside, the electrician who did my house is a pom, and he is doing the same - selling the house in australia to return to the uk relatively cashed up. i dont think he is the only one

I was actually wondering what the regulations are about foreigners buying property in the UK because at the moment it looks a lot more attractive than here.

 

[Miss Hale]

Well if you do the sums, that's what rental yields need to be when you don't have negative gearing in place. It has to pay any mortgage on the place plus maintenance costs plus some profit, or there is simply no point in anyone buying it to rent out.

In reality, if we do have the massive crash down to UK income/house price ratios, there will never ever be a better time for the government to scale down and remove negative gearing. Whether they do or not, I don't care. If it stays I'll take advantage of it when I can, if it goes I'll adapt my financial plans accordingly.

But do you think the negative gearing laws that are in place will stop us having a crash? I'm inclined to think prices won't come down substantially unless they get rid of negative gearing.

 

[Vixs]

But do you think the negative gearing laws that are in place will stop us having a crash? I'm inclined to think prices won't come down substantially unless they get rid of negative gearing.

You need cashflow to live and hold negatively geared property. If unemployment continues to rise in white collar industries (and others) then negative gearing or not, someone is going to feel the pinch.

Same deal with rentals, if people can't afford the rents, rents will come down eventually. That puts more pressure on the negatively geared investors and they may need to get out.

I'm not making any predictions, I just know that I'm saving for a house deposit and by the time I have the deposit I want, I think it will be a little more affordable.

EDIT: I didn't really respond to what you said. Negative gearing itself can't sustain the property market. Whether we get stagflation or deflation in property prices is what I'm waiting to see.

 

[Miss Hale]

Yes, I suppose negative gearing is good when everything is hunky dory but won't be of any use if things go pear shaped

 

[Vixs]

Yes, I suppose negative gearing is good when everything is hunky dory but won't be of any use if things go pear shaped

It's the perfect strategy for the property market that only ever goes up :

Shame about that whole global economy situation, right?

 

[Beej]

Nobody in my age bracket (22-25) wants to buy a home. Too expensive, don't want the debt/commitment

Ha ha - when I was your age back in the early 90s 95% of my friends / colleagues who were the same age said exactly the same thing and cited exactly the same reasons! There is nothing new under the sun......

http://www.irishcentral.com/news/Fo...r-one-tenth-of-boom-time-price-141164123.html

Click the link and have a look at the place...amazing what real estate is worth when no ones got any money.
~

The thing is, this is a business, not a house. I am actually aware of several similar hotel sales in Australia in the ski resorts - 20-50+ rooms, licensed bars, restaurant etc all included, that sold for about the same amount of money a few years ago - I know because I attended the auctions and considered purchasing them, but didn't go ahead with those plans at the time.

What commercial places like this fetch really depends largely on the economics and potential of the business that you run with them, rather than the general state of the residential property market.

I would have thought people who hang around forums like this would be a bit more commercially minded and not fall so easily for these sorts of contrived non-examples of "how bad" the property market in country X is (or is not)!

 

[Klogg]

Nobody in my age bracket (22-25) wants to buy a home. Too expensive, don't want the debt/commitment

I was 22 when I bought my first house, with a loan of 450k to my name. I'm now 25 and am glad I did it.

My point being - don't make these assumptions.

 

[Miss Hale]

Ha ha - when I was your age back in the early 90s 95% of my friends / colleagues who were the same age said exactly the same thing and cited exactly the same reasons! There is nothing new under the sun......

Really? When I was in that age bracket (also early 90s), all my friends were frantically buying real estate. I was the exception opting to use my savings for a big overseas trip :. ( Carpe Diem!! You only live once! )

Article here about how some areas have experienced a 40% drop in value already:

http://www.news.com.au/money/proper...eavy-discounting/story-e6frfmd0-1226297242759

 

[So_Cynical]

I was actually wondering what the regulations are about foreigners buying property in the UK because at the moment it looks a lot more attractive than here.

I actually had a bit of a look at real estate in Ireland and Spain last night...seems there are no restrictions at all on foreign ownership....its the residency visa that's a little hard to get.

-------------------------------

The thing is, this is a business, not a house. I am actually aware of several similar hotel sales in Australia in the ski resorts - 20-50+ rooms, licensed bars, restaurant etc all included, that sold for about the same amount of money a few years ago - I know because I attended the auctions and considered purchasing them, but didn't go ahead with those plans at the time.

Ok Beej its official...you are now well and truly out off the closet as a perma bull.

This is a business, not a house...lol because of course you cant live in a hotel right?

Had a look at some houses and apartments for sale in Dublin and Madrid last night and came to the inescapable conclusion that ALL real estate was cheap, commercial, retail, residential, industrial, everything..if it was land it was cheap...less than half the price of like for like Aussie real estate.

 

[McLovin]

I was actually wondering what the regulations are about foreigners buying property in the UK because at the moment it looks a lot more attractive than here.

There's no restrictions. I was looking at this a couple of month ago when I was in London. The trick is to be able to get a good rate though. That's a lot harder to do when you're not working in the UK.

It's pretty amazing when you look at what you can get in terms of yield and location. Compared to anywhere in Australia.

 

[Julia]

Article here about how some areas have experienced a 40% drop in value already:

I can endorse that. With the idea of building a new house, I've had some agents out to give me a likely selling price on my present property and have been taken aback to find it's down around 30% or even more on prices a couple of years ago.

 

[Glen48]

Ireland, USA, Spain, Iceland, Portugal, Italy, Greece, Belgium, UK, Egypt, China and a few others all have declining real estate markets This time its different been 80 years since the last tanking and as there is one every 75 -80 yrs it is all falling in to place as it has done for hundreds of years and will continue to do so unless we go back to the gold standard..

 

[Dowdy]

Ireland, USA, Spain, Iceland, Portugal, Italy, Greece, Belgium, UK, Egypt, China and a few others all have declining real estate markets This time its different been 80 years since the last tanking and as there is one every 75 -80 yrs it is all falling in to place as it has done for hundreds of years and will continue to do so unless we go back to the gold standard..

AS much as I like gold and a gold standard you can achieve the same result by removing or drastically increasing the fractional reserve requirement of banks.

 

[desolator]

I was 22 when I bought my first house, with a loan of 450k to my name. I'm now 25 and am glad I did it.

My point being - don't make these assumptions.

yeah and if you did that on your own Klogg, im sure you wouldnt be saying that if mummy and daddy didnt help.

 

[Starcraftmazter]

I was 22 when I bought my first house, with a loan of 450k to my name. I'm now 25 and am glad I did it.

My point being - don't make these assumptions.

I think he meant nobody smart. And before you protest, your post indicates that you bought at the very height of the bubble in 2009 when the government propped it up with the FHOB. Observe:



See you bought it at that peak. Now, nobody smart would ever buy housing (or anything) at the peak of the bubble.

 

[Glen48]

He is not alone and many are still buying, once the word get out around election time there will be another bribe offered to suckers to help the feds get back into power, as long as it doesn't tank before then so far some are only down 40%.
A mate sold his house 3 yrs ago for 360K it is back on the market not sold as yet for $390

 

[Starcraftmazter]

Well fortunately home sales are at a 15 year low, so there is some hope for our country yet.

 

[baby_swallow]

I think he meant nobody smart. And before you protest, your post indicates that you bought at the very height of the bubble in 2009 when the government propped it up with the FHOB. Observe:



See you bought it at that peak. Now, nobody smart would ever buy housing (or anything) at the peak of the bubble.

Looking at the graph, the last three major property price booms since 1950, were proceeded by retracements which lasted for several years. The retracements averages 38% (note: 38% Fib). If we apply this historical price action to the latest boom, the index will drop from the 2010 peak of around 350 pts to 284 pts.

Example of that is: a $500K property bought in 2010 peak will retrace back to $405K.
That's $95K loss or 19% off the purchased price.

 

[Starcraftmazter]

Looking at the graph, the last three major property price booms since 1950, were proceeded by retracements which lasted for several years. The retracements averages 38% (note: 38% Fib). If we apply this historical price action to the latest boom, the index will drop from the 2010 peak of around 350 pts to 284 pts.

First of all, that's a very narrow minded statement. You are selectively ignoring the mini-bubbles which retraced fully.

Second of all, the current bubble is literally orders of magnitude anything that has happened recently, and is not a good comparison. The best historical comparison is the 1890s housing bubble in Australia which overshot. This bubble will also overshoot.

There are just too many things you aren't taking into account (demographics, commodities & China bubbles, over-indebtedness to name a few), and you have fallen into the fallacy of predicting the future based on the most recent experiences.

 

[baby_swallow]

First of all, that's a very narrow minded statement. You are selectively ignoring the mini-bubbles which retraced fully.

...

Mate, you don't have to say such derogatory remarks. You don't know me.
I'm not portraying to be a genius about this subject.
You have your opinion and I got mine. In fact we are on the same side of this property debate.
BTW, looking at the posts, this is just my "quick" interpretation of the graph basing purely on price action of recent times. I see that you sounded that you've done an extensive research about this subject. Good on you.