The future of Australian property prices

[Julia]

That is just insulting.

You consider you have a monopoly on insults?

Have you priced a retirement home recently? We did the exercise a few years ago for a relative.... 300K bond and 60K a year!

Perhaps you could describe the retirement situation you are referring to. There are hundreds of high quality retirement villages where people can buy a property. either freehold or leasehold, and still receive whatever level of care they need, at prices between $250K and $1M+.

A bond refers only to nursing homes which I doubt is what most baby boomers have in mind for their retirement fergawdsake!

Time to go again
Had enough of romper room after a few posts
Leave you to it kiddies.

 

[Mr Z]

You consider you have a monopoly on insults?

I generally retort in kind. What is your problem Julia, you consider I have not been civil to you? Report me to teacher if that is the case.

A bond refers only to nursing homes which I doubt is what most baby boomers have in mind for their retirement fergawdsake!

Yup but I was talking about the pre boomer generations at that point, that is the second time in this series of posts you have clearly missed my point. I should say the third as I feel you are over looking the salient point of boomer real estate investment i.e. it is the size of the generation not the rate of ownership that is the major issue and to put a finer point on it that size in relation to the size of the following generation. VOLUME is the key and the imbalance is certainly enough to tip price at the margin! Unless that balance is leveled by some unholy level of immigration, it will have an impact. The level of immigration required would very hard to sell politically considering most of the people you are trying to replace are still in the job market and voting, but still it is a way of fixing the issue. However that has its own issues as given our laws it is very hard to just allow in the demographic you want.... you end up with family as well etc, which can produce other population bulge issues down the track.

BTW - As an example of boomers divesting themselves of assets you may want to look at the sale of small enterprises. There are many good little businesses coming to market due to the vendors wish to retire. Many of the ones I have been watching have been hard to sell, many I have seen just close the doors due to lack of buyer interest. Again it is the relative size of the sell side of the market and the buy side but I suspect that the nature and inclination of the following generation is playing into it. The one bright spark here seems to be the number of worried middle managers around... they will often leap into a business if they can secure new employment, they normally have the means to do so. I know two recently put in this position, one setup by himself the other is weighing options.

I posted a chart, not brilliant stats I will acknowledge but it was used in a newspaper. It gives a reasonable idea of the boomers property ownership and those older, to which a very similar argument applies. Given debt levels are extended, by relative measures as well as absolute, and that we are dealing with a population bulge that has introduced distortions it is hard to see where th market support is going to come from. Maybe we start mass immigration? I hear we set a record with the Australia Day ceremony, that is a start.

Sorry if I am a little too romper room for you adults, BTW I am a boomer by the way many demographers draw the line... but then even that is a little blurry, its a fat line if you look across the industry!

 

[Garpal Gumnut]

Sorry if I am a little too romper room for you adults, BTW I am a boomer by the way many demographers draw the line... but then even that is a little blurry, its a fat line if you look across the industry!

Z,

Mate,

The average attention span on the internet is 8 secs.

On ASF, due to it's collective above average IQ, it is more than likely less, approaching 7.8362 secs.

Keep it simple. I believe the simple call it KISS.

Dot point.

And listen to others.

They often can augment your point of view.

Just my thoughts.

gg

 

[Mr Z]

Keep it simple. I believe the simple call it KISS.

Dumbed down conversations at cross purposes, where would forums be without them!

I come here for another reason entirely.

Watching the nature of this thread change has been interesting.

Anywhoooo... now I seem to have the textual equivalent of (hands on ears) LA, LA, LA, LA, ----> you are such a baby...as a general retort.... so I will grab a Guinness and return to my voyeuristic repose.

I remember some of these characters giving me stick about gold back in the Stock Central & Reefcap days.. what and interesting decade or so it has been, with more to come.

Toodles old chap, have fun!

 

[Garpal Gumnut]

I come here for another reason entirely.

And what was that reason?

Z, don't choke mate.

gg

 

[MR.]

Watching the nature of this thread change has been interesting.

http://www.goldcoast.com.au/article/2012/12/11/443450_gold-coast-commercial-property.html#comment

As the bulls turn bearish and the bears turn bullish........

 

[MR.]

From the link above:

distressed commercial properties on the Coast showed investors were picking up bargains.

"This suggests there is demand for these properties at discount prices because investors can see they are undervalued assets," Ms Murdoch said.

They must be perceived as undervalued to sell? Huh!
The property market should have a share price attached for realization.

Yes …, I know, it's all media selling papers and all..... Here's one I've just dug up. The latest sale for that particular area:

http://www.onthehouse.com.au/buy/property/51451177
45% loss in 6 years. $1,625,000 to $900,000 (Nov 2012)

 

[Mrmagoo]

From the link above:


They must be perceived as undervalued to sell? Huh!
The property market should have a share price attached for realization.

Yes …, I know, it's all media selling papers and all..... Here's one I've just dug up. The latest sale for that particular area:

http://www.onthehouse.com.au/buy/property/51451177
45% loss in 6 years. $1,625,000 to $900,000 (Nov 2012)

Hilariously tragic. Someone just lost a fortune !

 

[Sean K]

Hilariously tragic. Someone just lost a fortune !

Doesn't look right to me. Perhaps the 1.6m was actually 0.6m?

 

[MR.]

Doesn't look right to me. Perhaps the 1.6m was actually 0.6m?

Hello Kennas, so it's a 50% profit in 6 years? That's better than a 45% loss. That's good going then!

I know what you mean..... but what is likely, really?

 

[Julia]

I generally retort in kind. What is your problem Julia, you consider I have not been civil to you? Report me to teacher if that is the case.

I'm sure you're 100% correct in everything you say. Obviously, you have decided only your opinion is worthwhile. That's fine. I haven't the interest or energy to argue. Much more serious stuff to attend to after massive storm here over several days.
I wish you every success.

 

[Sean K]

Hello Kennas, so it's a 50% profit in 6 years? That's better than a 45% loss. That's good going then!

I know what you mean..... but what is likely, really?

1996: 260k
2006: 1.6m
2012: 900k



I'm just not sure about these price sales figures. Anywhere.

Maybe prices really did explode between 96 and 06.

 

[Mrmagoo]

1996: 260k
2006: 1.6m
2012: 900k



I'm just not sure about these price sales figures. Anywhere.

Maybe prices really did explode between 96 and 06.

That is what we've been trying to say over 500 pages of thread.

 

[MR.]

1996: 260k
2006: 1.6m
2012: 900k

From a quick Gold Coast City Council search the land was registed in mid 1989. Possibly 7 years after the land could have still been vacant reflecting a sale at the 260K. Making the sale $96- per metre in 1996. (The land is 2678 square metres)

From experience in 2006 - 2007 I know the market hit $470 per metre for Gold Coast Industrial land. Making the land in question alone $1.258 million. To build 1000 square metres of tin shed would cost 1/2 that of a a tilt slab equating to $400- per metre. 1.258 + 400 = $1.658 million if the shed was new. Or $1658 per square metre of finished factory space.

Tilt slab factory space was over $2000- per metre finished in 2006 - 2007. Burleigh Heads hit $3000- per metre although it would have been alot smaller dwellings.

Vendors are hanging out for their $2000 per metre+ but they arn't going to get it anytime soon. A terrible possition many must be in and if you have to sell and there are no buyers what choice do you have? Every second to third factory is for sale or lease. If your a buyer "How long can you go without a tenant?"

The figures would be accurate.....

 

[Sean K]

That is what we've been trying to say over 500 pages of thread.

Yep, get that.

From a quick Gold Coast City Council search the land was registed in mid 1989. Possibly 7 years after the land could have still been vacant reflecting a sale at the 260K. Making the sale $96- per metre in 1996. (The land is 2678 square metres)

From experience in 2006 - 2007 I know the market hit $470 per metre for Gold Coast Industrial land. Making the land in question alone $1.258 million. To build 1000 square metres of tin shed would cost 1/2 that of a a tilt slab equating to $400- per metre. 1.258 + 400 = $1.658 million if the shed was new. Or $1658 per square metre of finished factory space.

Tilt slab factory space was over $2000- per metre finished in 2006 - 2007. Burleigh Heads hit $3000- per metre although it would have been alot smaller dwellings.

Vendors are hanging out for their $2000 per metre+ but they arn't going to get it anytime soon. A terrible possition many must be in and if you have to sell and there are no buyers what choice do you have? Every second to third factory is for sale or lease. If your a buyer "How long can you go without a tenant?"

The figures would be accurate.....

Thanks for the analysis. I thought the crazy hockey stick boom in SEQ land was from 2007-10. Geeesh.

 

[Mr Z]

I'm sure you're 100% correct in everything you say. Obviously, you have decided only your opinion is worthwhile. That's fine. I haven't the interest or energy to argue. Much more serious stuff to attend to after massive storm here over several days.
I wish you every success.

Nice retort, lead with a bit of passive aggression, step into a slur of arrogance, feign disinterest and exit stage right.

I just love people who feel the need to tell me what I think, that is always special.

Julia, you have done no more than assert that you choose not to accept my view while presenting no real counter argument let alone a credible counter thesis. You have given me nothing that I could take on board even if I rolled over and said "yes dear, of course you are correct". Yet you feel justified in serving up this tripe... incredible!

Good luck with the storm, my dad is in the midst of it all but so far no real concerns.

 

[sydboy007]

I'm sure you're 100% correct in everything you say. Obviously, you have decided only your opinion is worthwhile. That's fine. I haven't the interest or energy to argue. Much more serious stuff to attend to after massive storm here over several days.
I wish you every success.

See the below graph to understand what Mr Z is getting at.

In Summary

The 55-65 and 65+ age groups:

has around 3.231 million households

They would have around 2.691 million primary primary residences

I've not been able to find how many IPs this cohort own.

Now as this cohort progressively ages they will (as is currently happening):

Downsize - just look at how many lone households this group has
Sell up to move into assisted care
Fall off their perch

I would argue that the Children of the 65+ group already have a relatively high level of home ownership, so it's unlikely that their children will need the house as a primary residence, hence are quite likely to be sellers, especially if they want to avoid capital gains tax on the property.

To put things into a bit of perspective the under 45 years households collectively have around 1.546 million renting households. Even if we add the 45-54 year renting group in that still only adds up to 1.9 million households.

Now I know we have the new formation of households due to population growth, but it does seem like there is going to be plenty of established dwellings coming onto the market over the next 30 years simply due to the passing of the 55+ generations.

This increased supply is likely to cap prices rises, especially considering the still highly geared nature of the Australian housing market can't really accommodate too much above CPI prices rises in general.

 

[Mrmagoo]

Yup. The Baby Boomer generation has monopolised prosperity for such a long time it has become normal. In the years to come, as they start to retire, things will adjust and generation x will largely be the managers of generation y who will replace the boomers. As gen y are largely non-home owning, prices will fall so that they can become the new generation of home owners otherwise the political system of central banking policy starts to fail. If no one is borrowing, no one will be lending and no new money will enter the system causing deflation and economic turmoil.

 

[tech/a]

You guys have such a narrow view.

Most of the boomers are freeholding asset for passive income.
They won't sell---won't/don't want to sell.

They will have taught their siblings the power of passive income going forward as well.
When they cark it many of them won't sell either.

Your glut of housing won't eventuate.

The demographics in SA alone over the next 30 yrs is 52000 new homes in the South
And 158000 in he North.

The thing that will smash house pricing is world economies.
But if youown it it won really matter that much --- passive income

 

[sydboy007]

Yup. The Baby Boomer generation has monopolised prosperity for such a long time it has become normal. In the years to come, as they start to retire, things will adjust and generation x will largely be the managers of generation y who will replace the boomers. As gen y are largely non-home owning, prices will fall so that they can become the new generation of home owners otherwise the political system of central banking policy starts to fail. If no one is borrowing, no one will be lending and no new money will enter the system causing deflation and economic turmoil.

I can see this starting to happen already. A lot of Gen-Y simply don't want to shackle themselves with huge debts on housing. Why buy when the only way to afford it is to move so far out of the city you have to either buy a car or spend 1+ hours each way on public transport to work.

I'm just hoping the bubble deflate over time due to inflation, with rents and income catching up, though that process could take quite awhile.

Should unemployment go up much past 6.5% then we'll probably have a good shake-out of the property market, and hopefully I'll have sold off my bank shares cause any major fall in property prices is going to cost the banks some number with 9 zeros after it.