Australian (ASX) Stock Market Forum

The future of Australian property prices

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Went to two more auctions on the weekend out in Melbourne's west. Both advertised for at least $600,000, passed in at like 325. What a joke News.com.au's articles are saying that 'Spring is the time to buy' and also their latest one saying that 'Young people are the most optimistic about buying property' .. I don't think so.

Also I have heard from my uncle who is in the sector that a good strategy right now is to make one offer substantially below the asking price and then walk away. A lot of the over leveraged ones are desperate to sell so they might take what they can get. The problem right now for buyers is that the sellers aren't getting anywhere near what they want, but are holding out. So no sales made. The question is how long can either side wait. Will buyers up their bids, or will sellers lower their expectations. As a young buyer I have longer to wait so that's what I am going to do for now. A bigger deposit cant hurt
 
damien275x said:
Went to two more auctions on the weekend out in Melbourne's west. Both advertised for at least $600,000, passed in at like 325. What a joke News.com.au's articles are saying that 'Spring is the time to buy' and also their latest one saying that 'Young people are the most optimistic about buying property' .. I don't think so.

Also I have heard from my uncle who is in the sector that a good strategy right now is to make one offer substantially below the asking price and then walk away. A lot of the over leveraged ones are desperate to sell so they might take what they can get. The problem right now for buyers is that the sellers aren't getting anywhere near what they want, but are holding out. So no sales made. The question is how long can either side wait. Will buyers up their bids, or will sellers lower their expectations. As a young buyer I have longer to wait so that's what I am going to do for now. A bigger deposit cant hurt
Click to expand...

Never mind a deposit, wait a couple of years and pay cash;)
 
wayneL said:
The fractional reserve system has existed through times of price stability in relation to income.

It can be successfully argued that FR is inherently inflationary, but the key figure is house prices in relation to incomes.

Therefore I don't believe FR itself is the problem, the problem is due the extraneous factors.
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FR feeds the boom bust cycle if it is not managed very tightly, combined with the political desire to keep boom going at all costs you have a train wreck waiting to happen sooner or later, the later the bigger. FR needs absolute hard and fast limits that the political system is completely unable fiddle with. Canning the RBA might be a good start, the market needs to set real interest rates with no interfere from uneconomic players like central banks.

:2twocents

JMO
 
wayneL said:
Hang on, there is some logic missing increase in money supply and rising prices. While increasing money supply makes price increases possible, it is not causative in and of itself. It is much more multifaceted that that.
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It is a quite direct link considering the easiest and largest leverage most people can get is on their house. Its is a given that the state of the market at any given point is also critical but most of the time, when you are not out on a credit limb, it is a cert. We are out on a credit limb that is creaking more than a little so IMO "mo money" will do very little until we are back into some sort of market balance.
 
Mrmagoo said:
Banks not force you to buy a house, to pay an amount, to borrow too much. Banks are good guys. They lend money to the economy. We need banks.
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Granted but the words responsible and sustainable do come to mind when talking about lending, banks have gone too far in their competition to gain market share. The sober lending limits put in place in the past where there for a reason!

30K deposit 70% @ LVR = 100,000
30K deposit 97% @ LVR = 1,000,000 ---> they went there! + remember the 106% loans? Jeeez louise!!!!! :eek:

How can that not end badly? and how can the banks not be partially culpable for taking things to that extreme?
 
Miss Hale said:
I am actually hoping I might be able to do this. I'm starting to see a home as like a car; a neccessity but not something you want to take out a loan for.
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We are the same. Both 25 and yet to decide where we want to live permanently (or even for the next few yrs) so not much point buying a PPOR. I would only treat an investment proeprty as if it were a business (ie generating me a return/income) so as most rentals are still not positively geared we will just keep saving until an opportunity does present itself :)
 
McLovin said:
Check out what $900k gets you in a fairly average part of Sydney (near La Perouse)...

http://smh.domain.com.au/real-estate-news/propertys-pot-of-gold-20120902-257x5.html

Is it just me or is Fairfax's real estate news in perma-bull mode? I guess it's because they derive so much of their ever-declining revenue from real estate advertisements.
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Correct Fairfax will say it's booming regardless.

If you want value go to Tassie, look what you get in Sandy Bay


http://www.realestate.com.au/property-house-tas-sandy+bay-110299053
 
Miss Hale said:
I am actually hoping I might be able to do this. I'm starting to see a home as like a car; a neccessity but not something you want to take out a loan for.
Click to expand...

I'm in the same boat. Keep saving and investing and hopefully take out a very small loan if at all when the time comes.

prawn_86 said:
We are the same. Both 25 and yet to decide where we want to live permanently (or even for the next few yrs) so not much point buying a PPOR. I would only treat an investment proeprty as if it were a business (ie generating me a return/income) so as most rentals are still not positively geared we will just keep saving until an opportunity does present itself :)
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+1. We're in no hurry for our PPOR either. Once prices fall and rental yields remain approx the same(or increase if the states is anythign to go by) it will be a far better time to invest. I'd say we will get an IP before we look for a PPOR also.
 
Hate the RBA so much, last time they cut rates prices went through the roof. That is the cause pf the mess. If they cut rates this time and prices go through the roof it means they cut rates when they did not need to be cut. If the economy if performing poorly and requires a rate cut people should not be able to afford an extra 100k for a house.
 
Mrmagoo said:
Hate the RBA so much, last time they cut rates prices went through the roof. That is the cause pf the mess. If they cut rates this time and prices go through the roof it means they cut rates when they did not need to be cut. If the economy if performing poorly and requires a rate cut people should not be able to afford an extra 100k for a house.
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Well the didn't cut, and believe it or not magoo the rba is most likely oblivious to the housing bubble(stevens definitely is) and it probably has little impact on the decision of to cut or not. Jmo. Also rate cuts won't save falling prices, this is evident throughout the world. When it pops it pops. For now it's just sustaining it all.
 
Interesting reading this thread from 2006/07 and watching the sentiment slowly change. First it was 'go go go, up up up' then it was 'we've hit a wall, it'll bounce back' .. then it was the 'buyers market' .. then it was 'just winter blues' .. and now that spring is here and the results are still terrible, they've gone totally silent.

The investigative work my university group does, attending auctions and collating data from people, there is a huge gap between what the mainsteam medias (The Age, News.Com, RPData) report and what is actually going on. I'm not talking a few %, but outright lies. A survey in which over 3,500 people in the bracket of 19-31 were quizzed on housing and 85% were holding onto cash waiting, yet the media tell a totally different story. They'reeither lying or very misinformed. If anyone wants our figures send me a PM. Survey was conducted in person and via mail only to avoid people manipulating polls and voting twice online.
 
damien275x said:
The investigative work my university group does, attending auctions and collating data from people, there is a huge gap between what the mainsteam medias (The Age, News.Com, RPData) report and what is actually going on. I'm not talking a few %, but outright lies. A survey in which over 3,500 people in the bracket of 19-31 were quizzed on housing and 85% were holding onto cash waiting, yet the media tell a totally different story. They'reeither lying or very misinformed. If anyone wants our figures send me a PM. Survey was conducted in person and via mail only to avoid people manipulating polls and voting twice online.
Click to expand...

+1

My Mum just bought a place a few weeks ago. It is a more expensive suburb, which is where prices have been hurting. Through her solicitor they made an offer one week before the auction that was ~20% below the stated reserve. Two days before the auction the real estate agent called to say the auction was being canceled "although we do have a few other offers" and would she like to increase her offer. She didn't and 24 hours later they accepted the offer.

You almost get the feeling there is an undercurrent that will bubble to the surface in due course.
 
McLovin said:
+1

My Mum just bought a place a few weeks ago. It is a more expensive suburb, which is where prices have been hurting. Through her solicitor they made an offer one week before the auction that was ~20% below the stated reserve. Two days before the auction the real estate agent called to say the auction was being canceled "although we do have a few other offers" and would she like to increase her offer. She didn't and 24 hours later they accepted the offer.

You almost get the feeling there is an undercurrent that will bubble to the surface in due course.
Click to expand...

I would love to know how often that is happening.
 
prawn_86 said:
Would love to see the survey Damien. Can you post it in public yet? If not please PM me
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+2, Damien.

McLovin said:
+1

My Mum just bought a place a few weeks ago. It is a more expensive suburb, which is where prices have been hurting. Through her solicitor they made an offer one week before the auction that was ~20% below the stated reserve. Two days before the auction the real estate agent called to say the auction was being canceled "although we do have a few other offers" and would she like to increase her offer. She didn't and 24 hours later they accepted the offer.

You almost get the feeling there is an undercurrent that will bubble to the surface in due course.
Click to expand...
I heard the same story from a neighbour who was selling her late mother's house. It was to go to auction, but they accepted the agent's advice that they should take an offer around 20% less than the same agent originally suggested could be achieved.
Seems like at least a certain amount of self-interested manipulation by agents here.
 
Julia said:
+2, Damien.


I heard the same story from a neighbour who was selling her late mother's house. It was to go to auction, but they accepted the agent's advice that they should take an offer around 20% less than the same agent originally suggested could be achieved.
Seems like at least a certain amount of self-interested manipulation by agents here.
Click to expand...

Why are agents still so ubiquitous in the real estate market?!

The seller meets the agent who attracts the interest of buyers through internet ads that can be placed by the seller! Why not just cut out the agent and save on the commission? Are they legally required for a property transaction to occur? It doesn't make sense that you can sell many assets online without the need for an agent, yet agents are still employed in the sale of houses :confused:
 

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