The future of Australian property prices

[young-gun]

I spotted a new term in a real estate ad yesterday, 'price revised'. Surely they mean 'price reduced', I hardly think the price has gone up (Apologies is estate agents have been using this for years but it was the first time I'd seen it).

I agree, there is no shortage, it's a furphy.

i have recently noticed that real estate agents almost never put the price of the house on ads or photos anymore. i swear they use to do it on almost every ad of a house? also, when walking past the windows of RE gents, 60% of the window is taken up with houses they have apparently sold. are they trying to convince people they are moving houses out the door at a rapid rate? im a bit confused by their tactics.

 

[Starcraftmazter]

i have recently noticed that real estate agents almost never put the price of the house on ads or photos anymore. i swear they use to do it on almost every ad of a house? also, when walking past the windows of RE gents, 60% of the window is taken up with houses they have apparently sold. are they trying to convince people they are moving houses out the door at a rapid rate? im a bit confused by their tactics.

I would presume that's precisely what they are trying to do. I talk about housing to some people I know personally, and they still believe that people are buying houses just as always - and then I explain to them that no, sales volumes are actually at the lowest in over 20 years.

 

[Taltan]

i have recently noticed that real estate agents almost never put the price of the house on ads or photos anymore. i swear they use to do it on almost every ad of a house?

I've noticed this as well. I'm not an RE agent but I suspect the following
1. They are a lot more fussy buyers feeling no rush to buy so by not having a price they are limiting enquiries only to those who are genuinly interested.
2. There are bigger differences between what they can sell it at (which they know) and Vendors asking prices (which they convinced the Vendor) - if you advertise too low you might lose the Vendor.

 

[Julia]

I've had discussions with a few RE agents over the last few weeks to get some idea of what my present place would sell for if I go ahead with the building a new house idea.

1. They are much fewer on the ground than two to three years ago because there's simply not enough business.

2. Quite a few principals have just closed down their business because there's not enough profit after overheads have been met.

3. Buyers used to make an offer as the first step in the negotiation process. Now they are just saying "this is my first and final offer" and walking away if it's not accepted.
That sounds possibly a bit exaggerated as a generalisation but obviously it is happening.

4. Buyers are just not around in anything like the numbers they were. This is a regional centre with a population of 55,000. The population is continually growing.
Only 600 properties were sold in 2011.

5. I could expect to get 20 - 25% less than three years ago.

None of the agents I've spoken with have conveyed any sense that sentiment is improving for sellers.

 

[MrBurns]

I've had discussions with a few RE agents over the last few weeks to get some idea of what my present place would sell for if I go ahead with the building a new house idea.

1. They are much fewer on the ground than two to three years ago because there's simply not enough business.

2. Quite a few principals have just closed down their business because there's not enough profit after overheads have been met.

3. Buyers used to make an offer as the first step in the negotiation process. Now they are just saying "this is my first and final offer" and walking away if it's not accepted.
That sounds possibly a bit exaggerated as a generalisation but obviously it is happening.

4. Buyers are just not around in anything like the numbers they were. This is a regional centre with a population of 55,000. The population is continually growing.
Only 600 properties were sold in 2011.

5. I could expect to get 20 - 25% less than three years ago.

None of the agents I've spoken with have conveyed any sense that sentiment is improving for sellers.

What state ?

 

[Julia]

What state ?

Queensland, SE.

 

[MrBurns]

Queensland, SE.

It's happening all over, regional Vic is hopeless and even Melb is difficult, we will read about the crash after it's over but it's real and it's here.

Want something for nothing ? Have a look at Port Douglas -

http://www.realestate.com.au/buy/be...douglas,+qld+4877/list-1?activeSort=price-asc

 

[Starcraftmazter]

3. Buyers used to make an offer as the first step in the negotiation process. Now they are just saying "this is my first and final offer" and walking away if it's not accepted.
That sounds possibly a bit exaggerated as a generalisation but obviously it is happening.

That is good to hear, everyone should be doing only that. Ask them what they want, discount by at least 40% and demand that price.

 

[young-gun]

That is good to hear, everyone should be doing only that. Ask them what they want, discount by at least 40% and demand that price.

haha so skip the bull**** and jump straight to the inevitable bottom? i like it, recovery will be faster then....

 

[DB008]

That is good to hear, everyone should be doing only that. Ask them what they want, discount by at least 40% and demand that price.

LOL!!!
Almost fell out of chair reading that...

If l were selling a property and someone made an offer like that, l'd be like 'Yeah right'. I wouldn't take it seriously, that's for sure. House on the market for 200k, buyer offers 100k-120k (LOLOLOLOLOLOLOL)....

Hold on, with your theory SCM, if you keep using that method you'll eventually get that. By what? 2020 did you say?

 

[Glen48]

Can't believe any one would ever think about buying now just shows how many don't read/follow the news.

 

[DB008]

Europeans See Crisis Near End, Bernanke Warns on Recovery

Can't believe any one would ever think about buying now just shows how many don't read/follow the news.

But there does seem to be light at the end of the tunnel....

Europeans See Crisis Near End, Bernanke Warns on Recovery

European leaders signaled rising confidence that their region’s crisis is near an end, while Federal Reserve Chairman Ben S. Bernanke warned that a U.S. recovery isn’t assured.

The euro area’s woes are “almost over” after a slow initial response by policy makers, Italian Prime Minister Mario Monti said in Tokyo today. German Chancellor Angela Merkel said yesterday that the crisis is ebbing and her country’s borrowing costs will probably rise as its status as a haven wanes

Not saying we are out of the woods by a long shot, but if the USA starts to recover, there will be a positive knock on effect globally.

 

[Glen48]

You maybe right slight prob here:


With oil prices soaring ever higher, Saudi Arabia stepped in last week and vowed to increase its production by 25% if necessary.

But while that assurance managed to siphon a few dollars off of oil futures, the reality is there's nothing Saudi Arabia - or anyone else, for that matter - can do about rising oil prices.

In fact, crude is still on track to reach $150 a barrel by mid-summer.

As Saudi Oil Minister Ali Naimi pointed out last week, current oil supplies already exceed global demand by 1 million-2 million barrels per day.

For its part, Saudi Arabia is already breaking its own OPEC-imposed production quota limit, churning out about 10 million barrels of oil per day - close to its 12.5 million barrel capacity.

Yet the effect of that production has been negligible.

Oil is still trading at $106 a barrel on the NYMEX - something that has clearly flummoxed the world's largest oil producer.
And the US house prices are still going down after 5 yrs which means we have 2021 before it looks like being over so cash up boys it will be good for cheap houses buy one take one and don't forget your fries in the deal.

 

[Starcraftmazter]

haha so skip the bull**** and jump straight to the inevitable bottom? i like it, recovery will be faster then....

Well if you know property is going to devalue by at least 40% to 2020, why bother bidding up? May as well buy it for what it will be worth in the future.

Hold on, with your theory SCM, if you keep using that method you'll eventually get that. By what? 2020 did you say?

Yep, and I'm more than happy to wait. Meanwhile I would have saved up a fortune by not leveraging myself in massive debt and spending my entire salary on interest repayments while my property price goes down year after year.

But there does seem to be light at the end of the tunnel....

Europeans See Crisis Near End, Bernanke Warns on Recovery


Not saying we are out of the woods by a long shot, but if the USA starts to recover, there will be a positive knock on effect globally.

You actually believe that? Please, the Eurozone crisis has only just began - Italy and Spain haven't even defaulted yet!

And the US recovery is a joke.

Not to mention we live in Australia - the country of the biggest housing bubble in all of the world combined with the most uncompetitive economy.

 

[DB008]

l'm going to start saving paper newspapers, egg cartons and used milk bottles.

Sounds like it's going to be worse than the 1930's Great Depression...Y2K x 10000000

 

[Starcraftmazter]

l'm going to start saving paper newspapers, egg cartons and used milk bottles.

Sounds like it's going to be worse than the 1930's Great Depression...Y2K x 10000000

Much worse. The world had room to grow out of the great depression, it doesn't have room to grow out of this mess.

 

[Beej]

If there was a shortage, then stock on market wouldn't be at all time highs.

Sorry, but that is simply another false statement - especially for the two biggest cities:

Sydney:
http://www.sqmresearch.com.au/graph_stock_on_market.php?region=nsw::Sydney&type=c&t=1

Melbourne:
http://www.sqmresearch.com.au/graph_stock_on_market.php?region=qld::Brisbane&type=c&t=1

Also - your other comment claiming sales volumes are at 20 year lows is a little sensationalist and misleading - here's the data:



Also note that Sydney, and even Perth are in much better shape with respect to recent sales volumes - the stats are skewed by Melbourne and Brisbane in particular - one the result of over-building a huge recent house price surge / boom that is now deflating, and the later having bee dramatically impacted by floods:



So yes volumes in 2011 were low, but 2009 and 2010 were also very high - things are just evening out a bit I reckon. Also, volumes have been around / close to the levels of 2011 several times in the past 15 years, and there was no huge house price crash on any of those occasions, in fact the low volume periods immediately preceded booms? But maybe "it's different this time"???

The only argument for high house prices is "there's a shortage" .. If there was a shortage, why is it that anyone can log on, find a property, inspect it, then buy it? There's no competition, there are no long lines, people aren't on the streets. The problem is with affordability not availability. There is plenty more room to build out, and plenty more room to build up. Where do you think prices are going to go from here

It's not that simple - there are many artificial and real constraints on the ability for housing supply to be increased in places where people actually WANT to live. The only reason it is "easy" to buy a place if you have the cash is because the market is priced based on (or slightly above) the demand level presently. As for Qs etc - try going to rent a 2 bed flat in Sydney < 10kms to the CBD - believe me you WILL be waiting in a Q and competing for any decent place.

High house prices are bad for our economy, despite our economic illiterate government believing that this is true wealth. With large amounts of money being tied up in repayments, there is less money to be saved, allocated, and put to work to create goods and services that actually grow our standard of living.

This is an economically bogus argument. One mans debt is another man's asset. One man's repayment is another man's income. The money does not just disappear you know! People paying off debt spend less but those they pay can then spend / invest more. It's just circulation and distribution of the same money.

 

[Starcraftmazter]

Sorry, but that is simply another false statement - especially for the two biggest cities:

Why did you link to Brisbane for Melbourne? Here is the graph for Melbourne, and it is at al all-time high:
http://www.sqmresearch.com.au/graph_stock_on_market.php?region=vic::Melbourne&type=c&t=1

Furthermore, I fail to see why you cherry pick two cities. I look exclusively at the national picture always.

Also - your other comment claiming sales volumes are at 20 year lows is a little sensationalist and misleading - here's the data:

Yep, 20 year lows. I think you ought to look at your own graph.

Also note that Sydney

I am only concerned with the national average, thanks. And I thank you for continuing to provide evidence of my claims.

So yes volumes in 2011 were low, but 2009 and 2010 were also very high - things are just evening out a bit I reckon.

This is not about the two years 2009 or 2010 - they are at 20 year lows - that's 20, a two followed by a zero indicating two tens.

Also, volumes have been around / close to the levels of 2011 several times in the past 15 years,

Not really, in the last 15 years the only thing that comes close is the GFC, and the government needed to borrow massive amounts of money and throw it at the housing bubble to prop it up back then. Since then, prices have now fallen further than during all of the GFC, and the government is in no position to throw money at the bubble again.

It's not that simple

Yes it is.

As for Qs etc - try going to rent a 2 bed flat in Sydney < 10kms to the CBD - believe me you WILL be waiting in a Q and competing for any decent place.

There are lots of good places, massive developments around Zetland/Waterloo - and plenty more coming, you'll have absolutely no problem.

This is an economically bogus argument. One mans debt is another man's asset. One man's repayment is another man's income. The money does not just disappear you know! People paying off debt spend less but those they pay can then spend / invest more. It's just circulation and distribution of the same money.

You do realise Australians pay their interest to foreign creditors who lend us the money, right?

Why do you think we've had a massive current account deficit since the housing bubble started?

 

[McLovin]

This is an economically bogus argument. One mans debt is another man's asset. One man's repayment is another man's income. The money does not just disappear you know! People paying off debt spend less but those they pay can then spend / invest more. It's just circulation and distribution of the same money.

I think you're correct up to a point (don't ask me where that point is because I have no idea). The asset (owner-occupied property) can't be used in any productive way, aside from the basic utility of providing a roof over someone's head, nor can it earn a passive income through rent. For property investment, relatively large, and until recently increasing, amounts of capital are used to purchase assets that then run at a loss for many years. You could reasonably argue that over-investment in residential property (and the perceived safety of the asset class by borrowers and lenders) "crowds out" other, more productive, uses of that capital. That last point would appear to be very real given the growth in banks' residential property books to the detriment of small businesses.

Just a bit of thinking out loud.

 

[damien275x]

It's not that simple - there are many artificial and real constraints on the ability for housing supply to be increased in places where people actually WANT to live. The only reason it is "easy" to buy a place if you have the cash is because the market is priced based on (or slightly above) the demand level presently. As for Qs etc - try going to rent a 2 bed flat in Sydney < 10kms to the CBD - believe me you WILL be waiting in a Q and competing for any decent place.

Well yes it really is that simple, there are more houses than people who want to buy them, and if artificial constaints are part of a decision to buy you should rethink that, there is plenty of room to build up, and out. What are governments just going to hold onto Land and not ever release it? Never build new homes?

I've spoken to several Real Estate agents in Melbourne, one who is my great uncle, he told me they're basically up **** creek without a paddle and he will be shutting up in the next 2 years, doesn't really matter to him because he made a TONNE of money stealing the % in between sales during the boom, but this is a bearish sign you would have to say. Less sales, lower sales, lower profit = weak market and falling prices.

He said the wildcard would be the ability to keep confidence high, they have contacts and close relationship with property writers for mainsteam media, but I don't think this will have the effect it may have done in say, 1980 when there was no interenet and no independent analysts writing blogs and articles with more facts and figures and less spin.