The future of Australian property prices

[Ves]

until the evidence points me in a different direction, i will continue to hold my views. it will be interesting to see just how many nathan birchs there will be emerging in 5 years time.

Same as there always has been. Not many. He isn't the product of a bubble.

 

[trainspotter]

Same as there always has been. Not many. He isn't the product of a bubble.

Zackery ....... opportunity knows no bounds. When the blood runs in the street kinda stuff. It always amazes me the people who think in the negative cannot be swayed and have ZILCH experience but those in the positive camp are willing to look at both sides of the coin and make assumptions from there !

 

[Trembling Hand]

I do. There will not be any opportunities in Australian property for decades to come. It's a waste of money anyway, there is no way you can make more money in property than in trading if you know what you're doing. Who wants to play with such illiquid assets, pay all sorts of commissions and duties, and be at the whim of bubbles?

Are you claiming that you do know what your doing when it comes to trading? Or are we just again talking hypothetically?

 

[trainspotter]

Are you claiming that you do know what your doing when it comes to trading? Or are we just again talking hypothetically?

Apparently this soothsayer can predict the future of Australian Property Prices as well ! He is an engineer you know !! Good to see your posts again TH !!

 

[Beej]

I'm an engineer buddy,

Have you actually graduated yet???

 

[Beej]

You have maintained that property will fall 40% (actually it was 30% at first, I am sure) for most of your posts.

Now you are saying it is 250% over-valued.

Say the "real value" is 100.

250% over-valued is 250.

A 40% fall would take this figure back to 150.

Why would you start buying after at least a 40% fall? You would still be buying an over-priced (in your terms) asset would you not?

It would require a 60% fall to get back to 100. I think you are mixing your percentages up. I think it needs to fall more than 60%.

I could be wrong here though. Happy to be corrected.

Just one correction - if the "true value" is 100, and the asset is "250% overvalued", then present price is actually 350 (rather than 250). Try the example for "100% over-valued" and this should make sense ;-)

So in fact, a fall of over 70% would be required from the present point to get back to "true" value if we are 250% over-valued as SCM claimed. To put that in context, that would mean detached 3 bedroom houses in the western suburbs of Sydney selling for < $100k.

I also note that a claim of 250% over-valuation is very different from his subsequent prediction of 40% falls in real terms by 2020 - if CPI averaged 3%pa then that actually only works out to be a 25% fall from today's prices in nominal terms. This is basically Steve Keens current call - heavily revised from some of his more gloomy calls in 2008.....

Meanwhile - here's the latest charts from SCMs most respected data source - RP-Data, updated with their March house price data:

So it looks like last years falls over over for now, and have been since the end of last year. What will happen from here? I reckon modest growth in most cities - more in Sydney than elsewhere, spurred on by a few interest rate cuts through the year.

Also SCM - you said you live in Sydney? Check that second chart again maybe - there is NO crash in Sydney. Falls in 2008 were greater than last years in our town......

PS: If these charts don't convince you that there is no such thing as a "national" real estate market in Australia, and that all markets are regional, then nothing will.

 

[trainspotter]

Just one correction - if the "true value" is 100, and the asset is "250% overvalued", then present price is actually 350 (rather than 250). Try the example for "100% over-valued" and this should make sense ;-)

So in fact, a fall of over 70% would be required from the present point to get back to "true" value if we are 250% over-valued as SCM claimed. To put that in context, that would mean detached 3 bedroom houses in the western suburbs of Sydney selling for < $100k.

I also note that a claim of 250% over-valuation is very different from his subsequent prediction of 40% falls in real terms by 2020 - if CPI averaged 3%pa then that actually only works out to be a 28% fall from today's prices in nominal terms. This is basically Steve Keens current call - heavily revised from some of his more gloomy calls in 2008.....

Meanwhile - here's the latest charts from SCMs most respected data source - RP-Data, updated with their March house price data:

So it looks like last years falls over over for now, and have been since the end of last year. What will happen from here? I reckon modest growth in most cities - more in Sydney than elsewhere, spurred on by a few interest rate cuts through the year.

Also SCM - you said you live in Sydney? Check that second chart again maybe - there is NO crash in Sydney. Falls in 2008 were greater than last years in our town......

PS: If these charts don't convince you that there is no such thing as a "national" real estate market in Australia, and that all markets are regional, then nothing will.

OMFG !! Some sense at last !! Hear hear to that man !

 

[kincella]

All I can say is.....if you thought education was expensive , try ignorance...Derick Bok

just like tech a, trainspotter, bill m, and all the other successful, smart property people on this forum...(apologies if I missed each and everyone of you)
when there was only doom and gloom after the tech wreck of 2000, I too went on a property buying spree.....remember property had supposedly been in the doldrums since the 1990's...as per the media and spruikers....
however the RBA and all other property recording institutions, tell a different story...
there is no actual evidence of same ...

I bought a commercial property, in 2000, at a yield of 10%, it has gained on average 20% capital growth per annum, every year...
the income it is now returning is equivalent to 5% of the current market value,
or ....wait for it,,,,20% income pa...
I also purchased several resi props, currently returning 10% of the cost price,
and sold several resi props at 300% capital gains...the cash was banked, and ready for other prop development investments.....
I used OPM...ie other peoples money, via bank loans....usually only 10% of my money upfront.....
and some of you doubt that I can continue on this road, this very successful journey......
wow ......money talks, and believe me....it is loud and clear...
no wonder only 5% of the population have the gutz to go with their beliefs, experience, goals
and the other 95%, just wish and hope, pray.....against all odds.....
I forget the actual figures, but my parents bought a house with 10 acres of land in the 1940's for about A$5000 pounds, today the land value is worth $5,000,000 bucks...

a rather nice inheritance for the kids, in anybodies language......
and some will suggest that after 70 years, the whole thing will turn upside down..

education and ignorance.....a huge disparity between the two

 

[Starcraftmazter]

You have maintained that property will fall 40% (actually it was 30% at first, I am sure) for most of your posts.

Now you are saying it is 250% over-valued.

Say the "real value" is 100.

250% over-valued is 250.

A 40% fall would take this figure back to 150.

Why would you start buying after at least a 40% fall? You would still be buying an over-priced (in your terms) asset would you not?

It would require a 60% fall to get back to 100. I think you are mixing your percentages up. I think it needs to fall more than 60%.

I could be wrong here though. Happy to be corrected.

Sure.

First of all, I've never said 30% by 2020. Second of all, I do not imply that a fall of 40% will revert to fair value. I have never said nor implied this, that is merely my baseline prediction for 2020 - at least 40%. Likewise the 60% figure is my prediction for 2030.

I should also correct you that 250% over-valued is actually 350% of the original price (that being 100%).

Next, I never said that I will buy a property when prices drop by 40% or 60% or they are fair value - or any specific price point. I have said that I do not plan to buy a property anytime soon. If in the distant future house prices drop far enough that I feel they are affordable (measured by divergence from a price to income ratio of 3), and if I shall have a very significant need for a property, then that will present the most likely situation in which I will buy a property.

I do have thoughts about investing in Swiss or German property - but that's not here nor there.

I have not mixed anything up, as I am sure you can now see.

Clueless moron .......... Good bye. Good luck in whatever it is you do.

When one has to resort to personal insults, it is clear they have nothing of substance to add to the discussion. Good day.

Are you claiming that you do know what your doing when it comes to trading? Or are we just again talking hypothetically?

Is it relevant to my statement? Are you implying I would have more luck making money in property is I don't? I disagree on all counts.

Meanwhile - here's the latest charts from SCMs most respected data source - RP-Data, updated with their March house price data:

First of all, those are nominal and not real prices. Second of all, RP Data have stopped seasonally adjusting nor revising when they released their daily index, so you need to keep seasonality in mind. For instance - in March, house prices typically register a significant rise, so if you take that into account, they actually fell in seasonally adjusted terms.

It is fine that this is disregarded, for it will be made up elsewhere in the year (can't wait till winter) - but it does dillute the meaning of monthly figures, as YoY prices become far more important.

And in regards to revisions, it is actually the very usual case that RP revised monthly prices down 0.1% - so that should also be taken into account.

So it looks like last years falls over over for now, and have been since the end of last year.

That is false as I have explained above. You merely lack a proper understanding of the data you are failing at trying to analyse. Better luck in the future perhaps.

 

[trainspotter]

All I can say is.....if you thought education was expensive , try ignorance...Derick Bok

just like tech a, trainspotter, bill m, and all the other successful, smart property people on this forum...(apologies if I missed each and everyone of you)
when there was only doom and gloom after the tech wreck of 2000, I too went on a property buying spree.....remember property had supposedly been in the doldrums since the 1990's...as per the media and spruikers....
however the RBA and all other property recording institutions, tell a different story...
there is no actual evidence of same ...

I bought a commercial property, in 2000, at a yield of 10%, it has gained on average 20% capital growth per annum, every year...
the income it is now returning is equivalent to 5% of the current market value,
or ....wait for it,,,,20% income pa...
I also purchased several resi props, currently returning 10% of the cost price,
and sold several resi props at 300% capital gains...the cash was banked, and ready for other prop development investments.....
I used OPM...ie other peoples money, via bank loans....usually only 10% of my money upfront.....
and some of you doubt that I can continue on this road, this very successful journey......
wow ......money talks, and believe me....it is loud and clear...
no wonder only 5% of the population have the gutz to go with their beliefs, experience, goals
and the other 95%, just wish and hope, pray.....against all odds.....
I forget the actual figures, but my parents bought a house with 10 acres of land in the 1940's for about A$5000 pounds, today the land value is worth $5,000,000 bucks...

a rather nice inheritance for the kids, in anybodies language......
and some will suggest that after 70 years, the whole thing will turn upside down..

education and ignorance.....a huge disparity between the two

Methinks you have had one drink too many .......... you have disaproportioned yourself

 

[trainspotter]

I should also correct you that 250% over-valued is actually 350% of the original price (that being 100%).

That is false as I have explained above. You merely lack a proper understanding of the data you are failing at trying to analyse. Better luck in the future perhaps.

OHHHHHHHHHHHHH ........ try the MATHS my learned friend ......... you were ALL for it before !!

You cannot take more from a pie than 100% You cannot give 110% as it is more than the ratio allows. You cannot say that propety is 250% OVER VALUED as if it was to drift into the negative it is worth NOTHING !!

Get off your perch and start understanding what is actually going on.

YOUR LACK OF UNDERSTANDING IS AMAZING !

 

[DB008]

All this negativity in this thread, l'm going to crawl back into my mansion....





I'm upgrading too, almost finished...

 

[Starcraftmazter]

You cannot take more from a pie than 100% You cannot give 110% as it is more than the ratio allows. You cannot say that propety is 250% OVER VALUED as if it was to drift into the negative it is worth NOTHING !!

You make no sense. Zero. But of course this is nothing new

 

[trainspotter]

You make no sense. Zero. But of course this is nothing new

I say again ...... good luck with your endeavours !

 

[Caveman]

What is happening now has not happened for a hundred years

Not sure if I should get into this debate,but what is happening now that hasnt happened for a hundred years?

 

[tech/a]

Not sure if I should get into this debate,but what is happening now that hasnt happened for a hundred years?

Nothing
As in all things concerning money
There will be those who

Do
Don't
And
Discuss.

If you don't want to be dis---appointed do something!

 

[Trembling Hand]

Is it relevant to my statement? Are you implying I would have more luck making money in property is I don't? I disagree on all counts.

Well yes it is relevant. If your words are to be taken any more serious than just part of the hopeless 95%. Just like your statement that Gold was better than property over the last whatever period I don't think you have the ability or balls to make money out of any of the next moves.

Anyone can state what has been good and why in hindsight. Lots throw out guesses as to what will happen next. Very few actually have a record of doing and succeeding on their talk.

 

[Starcraftmazter]

Not sure if I should get into this debate,but what is happening now that hasnt happened for a hundred years?

Yes, there was a relatively speaking very big property bubble in the 1890s - much smaller than current, but in those times it was very big. People lost everything, it was pretty devastating. Now we're headed for many many times worse.

Just like your statement that Gold was better than property over the last whatever period I don't think you have the ability or balls to make money out of any of the next moves.

It's not just a statement - it is a very easily verifiable fact. I also don't understand what you mean about me not having the balls to make money out of any "next move". I trade and I take positions pretty much every day in all sorts of things.

The next big move in property is down, there's no real way to profit from that. It will also happen over a long period of time (as all bubbles and crashes do), and I do only short-term trading, so...

There are a great many ways to make money in this world - however leveraging up to your neck in debt, just to pay interest to foreign banks on rapidly devaluing assets is most certainly not one of them.

Anyone can state what has been good and why in hindsight. Lots throw out guesses as to what will happen next. Very few actually have a record of doing and succeeding on their talk.

You don't need a record, just take a look at all the evidence, and the only logical conclusion is that we are past the peak of the biggest property bubble in our history and pretty much one of the biggest in the world (depending on whether you consider HK a bubble or not), and that property prices in Australia are going to crash over the next several decades.


On a related note, house prices in USA are set to go down another 10% this year, due to a large quantity of foreclosures are entering the market on the back of a court ruling allowing their sale.
http://www.bloomberg.com/news/2012-...ping-10-in-u-s-on-foreclosures-mortgages.html

So you see bubbles burst over long periods of time. That is how it will happen in Australia - years after the peak, they will still be going down a lot, and more, and more and even more. Just like in USA.

 

[Trembling Hand]

I also don't understand what you mean about me not having the balls to make money out of any "next move". I trade and I take positions pretty much every day in all sorts of things.

Yeah the TAB is full of losers who do the same. But you would be an idiot to take advice off them. Thats my point. While you stating with much certainty,
1. That there is no money to be made in property and
2. That you can make much more trading

Until you actually do you are just another unproven punter. One of the 95% which is why I find your certainly in thought and inability to listen to those that have gone before you and walked the walk strange.

 

[Starcraftmazter]

Yeah the TAB is full of losers who do the same. But you would be an idiot to take advice off them. Thats my point. While you stating with much certainty,
1. That there is no money to be made in property and
2. That you can make much more trading

Until you actually do you are just another unproven punter. One of the 95% which is why I find your certainly in thought and inability to listen to those that have gone before you and walked the walk strange.

Your post doesn't make sense. First of all, who or what is TAB? Second of all, what do you mean until I do? Do what exactly? How do you measure my success arbitrarily in such a way as to determine how much better or worse I would have done had I bought property? This makes no sense.

Furthermore, I do listen to people - but only those clearly smarter than me about the subject matter being discussed. It is clear that anyone who does not comprehend the scale of our bubble does not know much about property prices, what drives them, and where they are going. The feeling that I get about a lot of the older people here, is that they bought properties through the bubble and watched them rise in value. This takes no skill, no experience, no specific quality - anyone can do that, and a lot of people did that. That in no way makes them qualified to even discuss what is going to happen in the future. In many ways it gives them an incorrect bias - because the only world they know, is one where property prices only ever go up. They are unable to comprehend what will happen in the future because it is simply so far outside of what they know and "understand". So you see, I would argue that those with "experience" in property are the least well placed to make the correct judgements heading into the future.

But you need not listen to me - all the data is out there, do your own research and do your own analysis, it's pretty simple. At least to me.