The future of Australian property prices

[young-gun]

What else do you think l was trying to say?

sorry i was reading it over and over and was just completely blank at the time, hence my pointless post

 

[cynic]

If you haven't noticed, our world rewards those with overinflated ego's + successful psychopaths. As for the share market, it doesn't care how big your ego is. It can destroy you whether you have a big ego or not, on the other end it can reward you whether you have a big ego or not.

No. I can't say that I have. However, I have noticed plenty of egotists puffing themselves up and pretending to be successful. I've also noticed that some people aren't sufficiently astute to distinguish between gold and iron pyrites.

In my opinion engineers contribute way more towards society than the paper pushing professions that the majority in this forum have jobs in. There is a reason that there is a lack of engineering graduates in first world countries, because its harder than those other degrees which eventually lead you to a higher paying, paper pushing job. Engineering is the reason Germany is different from the other first world economies. Instead of overvaluing paper pushers, which aided in the creation of fake prosperity through debt based real estate, they made sure they cultivated their engineers as well.

So I take it that you consider that my dwellings, currently owned outright, along with my modest savings - mostly derived from real estate investment, are fake?

I'm glad that the various industries I regularly patronise hold a different opinion - otherwise I'd have serious problems on my hands.

P.S. I've worked with many engineers in a variety of industries. All were highly educated and some were even intelligent. Others demonstrated a poor understanding of mathematics and Newtonian physics. (Our educational institutions have a lot to answer for!)

 

[Macquack]

judging from the level of gloating i would put his assets at well above the losses incurred by a pear shaped event such as voyager falling apart. so perhaps he was un-phased by the event. or behind all the speculation it may have had no affect on him at all? if he had no ties with them other than they were simply his builder then he wouldve had insurance and been fine even with them going under, a new builder would have come in and wrapped things up anyway.

Young-gun, I think you are on the money.

What ever happened with Voyager Homes, I would say it would have cost Trainspotter sweet FA. It is the suppliers and subcontractors who do not get paid through no fault of their own.

Limited liability is just a convenient excuse for bad management (get out of jail free pass).

Anyway enough speculation when we can get the true story from the horses mouth. Any comments, Trainspotter???

 

[Beej]

I saw this in an article in todays Sun-Herald, and thought it was worth posting:



Wasn't someone on the thread recently trying to argue rents in Sydney have not been rising? How about 50% over the past 6 years? That's 7% pa average growth - yikes!

Meanwhile Sydney house prices increased at a modest 3% pa - basically tracking inflation on average.

PS: Would be good to see the same data for / including units as well; I reckon rents for those have likely increased more, as have prices.

 

[Starcraftmazter]

PS: Would be good to see the same data for / including units as well; I reckon rents for those have likely increased more, as have prices.

You cannot look at a few select high-wealth beach-side suburbs and say they represent Sydney.

I have posted just a few pages ago real rents for both units and houses in Sydney, and they have all been flat for years.

 

[Beej]

You cannot look at a few select high-wealth beach-side suburbs and say they represent Sydney.

Who is doing that??? The data is for median rents and median prices across all of Sydney - you might want to look at the chart again!

PS: The individual suburb results shown are the "top 5 and bottom 5" median asking rent changes over the past 12 months.

PPS: "Real" rents don't mean squat - as you will learn when you move out of home, you have to pay your rent in nominal dollars! And given that the chart shows 7% pa increases in median rents over the past 6 years, that is about a 4% pa "real" increase over and above CPI over the same period anyway.

 

[lurker123]

No. I can't say that I have. However, I have noticed plenty of egotists puffing themselves up and pretending to be successful.

Confidence is rewarded, if you had to choose between hiring a person outwardly confident in their abilities and someone who was not, assuming all other aspects were equal, the majority of people would pick the confident person.
Over confidence or having a large ego, is just confidence taken to the extreme.

Successful Psychopaths are rewarded in our society. Psychopathy doesn't just mean you are crazy and want to kill people. The majority of people don't understand psychopathy. You can identify psychopathy from brain scans. Watch this video if anyone is interested in understanding what psychopathy actually is: http://topdocumentaryfilms.com/are-you-good-or-evil/
There is a higher percentage of psychopaths in the prison population than in the rest of society. Likewise there is a higher percentage of psychopaths at the top of society, corporate leaders e.t.c. Basically psychopaths are running our society.

So I take it that you consider that my dwellings, currently owned outright, along with my modest savings - mostly derived from real estate investment, are fake?

I'm glad that the various industries I regularly patronise hold a different opinion - otherwise I'd have serious problems on my hands.

I never said the houses or the labor used to build the houses was fake. I said that the prosperity created by overvalued housing is fake. Simply put there is not enough jobs for the population due to advancements in technology. In order to keep the unemployment rate low, fake prosperity needs to be created.

How is this fake prosperity created:

1) Planned obsolescence, products are designed to fail just after the warranty expires so that companies will continue to have a steady income stream.

2) Marketing and advertising designed to keep consumers buying new products.

3) The marketing and advertising of debt. Such as:
- get this credit card
- you need a degree no problems, we will give you a student loan (America)
- we will give you a mortgage on this house, we don't care that you can't repay it since we are going to offload your crappy mortgage to someone else, by the way we can give you this mortgage because the bush government wants everyone to own a house. (America)

4) Government debt, especially World Wars. Government debt or should I say stimulus reduces unemployment. It is pretty obvious how the World Wars reduced unemployment.

5) The coming into existence of various paper pushing jobs, bureaucracy and creative financial products such as derivatives. Some of which probably wouldn't be needed if people had common sense and legislation was made to be simple and straight forward. However the current system promotes over legislation, creating bigger and bigger government. Meanwhile giving lawyers, bankers, accountants e.t.c their jobs reducing unemployment.

6) Unlimited growth

If you look at Ireland they built tons of new houses allowing the construction industry to employ tons of workers, hence reducing unemployment and creating fake prosperity. What is happening to the houses that were built with the real labor, they are getting demolished because no one is buying them and its cheaper to demolish them than to keep them.

The current monetary system relies on unlimited growth for stability, without unlimited growth it is unstable, therefore it is inherently unstable.
http://www.youtube.com/watch?v=f6uuAupT4AQ
illustrates the problems with the current monetary system. Gold spruikers have taken bits and pieces from the money as debt series to promote their agenda of returning to the gold standard. However it is NOT the intention of the money as debt series to promote the return of the gold standard.

I hope you realize there are two parts to prosperity.
1) Low unemployment
2) Technology which improves our lives, our society is more prosperous than any that have come before due to technology. However in the current system it is a double edged sword.

The over valuing of real estate creates debt. Debt is money, without debt there would be no money in existence. There would be no money to facilitate trade. Without money people can't put food on their table. Without someone being in debt people can't put food on their table. This is all explained in the money as debt series. Therefore the over valuing of real estate creates debt/money which in turn helps create fake prosperity and reduces unemployment.

P.S. I've worked with many engineers in a variety of industries. All were highly educated and some were even intelligent. Others demonstrated a poor understanding of mathematics and Newtonian physics. (Our educational institutions have a lot to answer for!)

Probably because the universities let people pass if they get over 50% rather than 70-80%. Using a drivers license as a example, they wouldn't let you pass the DKT if you only got 50%. Another problem is that they teach you something once and then move on to the next topic. Proper learning happens through repetition. E.g. when you learn how to drive a car you are taught and then pass your P's. Through repetition, continually driving on the road you eventually get your full license. So the university degree is basically like passing your P's. The final stage happens in the workplace through repetition (years of experience).


I recently stumbled upon this video which if true, it may be made up propaganda. Highlights the flaws in the current system in bureaucracy and the undue power that those with money (in this case big pharma) have over society.
http://www.youtube.com/watch?v=2BH9XTxb290&feature=related

 

[Starcraftmazter]

PPS: "Real" rents don't mean squat - as you will learn when you move out of home, you have to pay your rent in nominal dollars! And given that the chart shows 7% pa increases in median rents over the past 6 years, that is about a 4% pa "real" increase over and above CPI over the same period anyway.

Thank you Mr. ivory Tower economist. My nominal salary has risen twice in my fist year of work, both times well in nominal access of my annual nominal rental increase which is completely insignificant in nominal terms.

Given that official statistics show no real rental growth in Sydney, the newspaper is clearly mistaken.

 

[Beej]

Given that official statistics show no real rental growth in Sydney, the newspaper is clearly mistaken.

Which official statistics are you talking about? ALL statistics show rising rents in Sydney over the past 5 or so years? Your anecdotal evidence is meaningless in the broad context. No ivory tower required to see this - if you don't believe Sydney rents have been rising, a lot, you are delusional.

 

[Starcraftmazter]

Which official statistics are you talking about? ALL statistics show rising rents in Sydney over the past 5 or so years? Your anecdotal evidence is meaningless in the broad context. No ivory tower required to see this - if you don't believe Sydney rents have been rising, a lot, you are delusional.

The past 5 years are not as important as what has happened since the peak of the bubble. Since that time, real rents have completely flatlined.



About $10 since 2008, and no growth since 2010.



About $5 more rent than in 2009, and no growth since 2010.


What does the future hold? Rents will flatline and go eventually deflate.

 

[So_Cynical]

if you don't believe Sydney rents have been rising, a lot, you are delusional.

Ive rented in Sydney for the last 12 years...in the last 3 or 4 years i would think the following.

Rents rising "a lot" = No
Rents rising = Yes
Rent rises beating inflation = No

IMO

 

[McLovin]

Ive rented in Sydney for the last 12 years...in the last 3 or 4 years i would think the following.

Rents rising "a lot" = No
Rents rising = Yes
Rent rises beating inflation = No

IMO

I moved recently. Offered 15% below the asking rent and they accepted without even flinching. In Sydney also.

 

[young-gun]

im not to sure what you are all trying to achieve by arguing about rent yields. its doesnt really have anything to do with house prices at the moment.an increase in rental yields is not a reflection of house prices, it is simply an indication that there is more demand for rentals. if more people are looking to rent i would think that this would indicate that less people are interested in owning their own home, which could possibly lead to prices falling?

rental prices are dictated by the market, not the lessor. of course wents are high and probably going up, as it is far cheaper to rent than to own in this crazily over priced market so there is huge demand.

it cant be said that this means investors would be buying more houses to cater for the influx of people trying to rent, as if they were then rents wouldnt increase as they would be meeting the demand. not to mention that its not a good market to be purchasing IP's imo.

so i personally fail to see how the too are related at the moment. and I only believe the two will affect one another when the crash is in full swing. there will come a point where it will be cheaper to get a mortgage and own a house than to pay current rent rates, i would imagine this would then start to drive down the demand for rentals.

SCM i think you should be arguing for higher rent prices, and vice versa for beej if you were to support your underlying views

 

[Beej]

The past 5 years are not as important as what has happened since the peak of the bubble. Since that time, real rents have completely flatlined.



About $10 since 2008, and no growth since 2010.

Your own chart here shows house rents in SYDNEY (the subject of my post) going up by 20-25% AFTER adjusting for inflation, since March 2006, ie, about 3.5-4% pa REAL increase on average over that period. This data agrees with that shown in the article I posted.

As for what happened since 2010 - rents have grown at CPI since then, so they have gone up! As you can see rents tend to increase in bursts then grow with inflation for a bit, then burst again and so on. The point you need to get is that 7% pa AVERAGE rent growth over 6 years is significant.

About $5 more rent than in 2009, and no growth since 2010.


What does the future hold? Rents will flatline and go eventually deflate.

Looks like Sydney rents for units have gone up less than for houses, but they have still outpaced CPI since 2006 by a good 2% pa.

As for the future, population pressure will ensure ongoing demand and further rental increases for Sydney. Rental deflation for Sydney is nothing but a dream.

 

[Starcraftmazter]

SCM i think you should be arguing for higher rent prices, and vice versa for beej if you were to support your underlying views

How so? The relation between rental yields and house prices is that as housing prices fall, rental yields rise - but this applies only and only to new investments, because otherwise you have the drag of capital loss to cancel it out. And of course until the house prices bottom out, all new investments still have to face that.

We however are not really discussing yields so much as how fast rental prices are rising. From what we can see, myself and others who actually rent in Sydney can testify that they have not really been rising at all - and certainly not in real terms.

My outlook on rents is pretty simple, they will go down along with house prices. Not necessarily at the same speed, but historical precedent shows that housing downturns result in lower rents because of less aggregate demand on housing in general - both buying and renting.

As for what happened since 2010 - rents have grown at CPI since then, so they have gone up! As you can see rents tend to increase in bursts then grow with inflation for a bit, then burst again and so on. The point you need to get is that 7% pa AVERAGE rent growth over 6 years is significant.

They haven't gone up in real terms. They have gone up with the housing bubble, and now they have levelled off, and next they will drop.

As for the future, population pressure will ensure ongoing demand and further rental increases for Sydney. Rental deflation for Sydney is nothing but a dream.

Population growth does not implicitly put pressure on rents, so long as development keeps up. Given that population growth in Australia is dropping, while construction continues steaming ahead, I do not see how higher rents are possible into the future.

 

[trainspotter]

What's the story with Voyager TS?

Sorry it has taken so long to get back to you WayneL ... Portugal is getting better around Estoril Cascais for me. They went broke due to a sheeeetload of carried forward debt that they failed to disclose to me when I joined in union with them. It also turned out that the directors were having their own behind closed doors backstabbing session and I got caught in the middle. Lawyers got involved and insolvency was the result.

 

[trainspotter]

judging from the level of gloating i would put his assets at well above the losses incurred by a pear shaped event such as voyager falling apart. so perhaps he was un-phased by the event. or behind all the speculation it may have had no affect on him at all? if he had no ties with them other than they were simply his builder then he wouldve had insurance and been fine even with them going under, a new builder would have come in and wrapped things up anyway.

im betting he has had a sneak peak at ASF while hes away though

No losses incurred on this development ..... slight time delay so interest component and holding costs eroded PM at the end of the day. The stoooopid part behind this venture (the building company side of things) was that I actually knew the people I was jumping into business with were (deleted for slanderous and liable reasons) to say the least.

I thought I could get in and turn the business model around and take a bit of profit share but alas alack it was not to be. Just goes to show that I should have stuck to what I know and remained a one man wolf pack.

If you are to ever get over to Portugal just come straight to Estoril Cascais by the way.

 

[wayneL]

Just goes to show that I should have stuck to what I know and remained a one man wolf pack.

+1

Glad all will work out OK

 

[moXJO]

No losses incurred on this development ..... slight time delay so interest component and holding costs eroded PM at the end of the day. The stoooopid part behind this venture (the building company side of things) was that I actually knew the people I was jumping into business with were (deleted for slanderous and liable reasons) to say the least.

I thought I could get in and turn the business model around and take a bit of profit share but alas alack it was not to be. Just goes to show that I should have stuck to what I know and remained a one man wolf pack.

If you are to ever get over to Portugal just come straight to Estoril Cascais by the way.

Some of the members on here won't be happy Tspot, they seemed to want to have you completely blown off the financial map
Let the cutting of the poppies begin.

 

[trainspotter]

Young-gun, I think you are on the money.

What ever happened with Voyager Homes, I would say it would have cost Trainspotter sweet FA. It is the suppliers and subcontractors who do not get paid through no fault of their own.

Limited liability is just a convenient excuse for bad management (get out of jail free pass).

Anyway enough speculation when we can get the true story from the horses mouth. Any comments, Trainspotter???

Wrong again Macquack. The subcontractors and suppliers were all paid up. It was the creditors that got a touch up for a lousy 175k. It was the directors loans to the company to keep it afloat that was the cause of insolvency as they tried to claw back their initial investment in the original business BEFORE the name change to Voyager Homes. I personally got stung for 50k and am on the list of creditors.

If you want EXACT details and not dragged across the boards I am more than happy to tell you ALL about it if you PM me.