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The future of Australian property prices

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It's quiet in here.......almost too quiet.......

Australia’s dollar fell to the lowest in almost three years versus the greenback after home-loan approvals grew at the slowest pace in three months, boosting the case for further cuts to borrowing costs.

“Housing is the one area most likely to make up for the mining investment downturn, and it’s disappointed,” said Joseph Capurso, a Sydney-based foreign-exchange strategist at Commonwealth Bank of Australia. “You’ve got to say that the Aussie’s going to keep on falling.”

Australian home-loan approvals rose 0.8 percent in April from the month before, the smallest increase since January. Economists surveyed by Bloomberg News forecast a 2 percent rise. March’s gain was revised to 4.8 percent from 5.2 percent.
 
Sold a commercial property last month for what I paid for it.
Had 2 apartments up for sale for 10 mths and just took them off the market
will continue renting them.

Have secured 3 housing sub divisions from one of Adelaides leading project builders.
They have already sold 2 of the 3 sub divisions all from the new home owners grant.
There are another 2 about to be released.

So not all doom and gloom.
Some fantastic prices from builders right now.
 
tech/a said:
Sold a commercial property last month for what I paid for it.
Had 2 apartments up for sale for 10 mths and just took them off the market
will continue renting them.

Have secured 3 housing sub divisions from one of Adelaides leading project builders.
They have already sold 2 of the 3 sub divisions all from the new home owners grant.
There are another 2 about to be released.

So not all doom and gloom.
Some fantastic prices from builders right now.
Click to expand...

This isn't a criticism tech, but what is your plan if prices start falling? Are you satisfied with the rental return you will be receiving and carry them until prices return to current levels? Just interested to know why it doesn't bother you?
 
Bit of a building boom where I am and I'm flat out with work. But it is mixed feelings with others telling me they are doing it tough. The mines are really coming off the boil though and the stories of managers telling staff "don't run out and buy any big ticket items" are floating round.
Property prices don't look like they have shifted much, probably up if anything.
 
WilkensOne said:
This isn't a criticism tech, but what is your plan if prices start falling? Are you satisfied with the rental return you will be receiving and carry them until prices return to current levels? Just interested to know why it doesn't bother you?
Click to expand...

I own them.
Freehold
Sick of the corporate title
Rubbish and tenants for 13 years.
Think I can get a better return elsewhere
Only have to wait 18 mths for freeway and
Rail. Worth the wait I think.

I'm also hearing that we are an anomaly in our industry
" Civil Construcion "
 
tech/a said:
I own them.
Freehold
Sick of the corporate title
Rubbish and tenants for 13 years.
Think I can get a better return elsewhere
Only have to wait 18 mths for freeway and
Rail. Worth the wait I think.

I'm also hearing that we are an anomaly in our industry
" Civil Construcion "
Click to expand...

Hi Tech/a,

Given the issues currently going on in your industry what are your thoughts on purchasing RE now?

I've been considering an apartment in Victoria - I'm haggling with a distressed vendor in a good inner-city location; currently sitting at a price 10% cheaper than what they paid for 2 years ago off the plan.

The way I see it is this:

Pros:
- Record low interest rates (will we ever see something like this again, I don't know)
- Investor finance is well on the increase (up 21% last month, compared to owner-occupier 7%). I see it as a strong point (kind of like the stockmarket when the big boys get in before the general public; somehow I don't see too many in the general public confident enough to invest right now)
- Shortage of construction may equate to shortage of available dwellings
- Rents are rising

Cons:
- Record low interst rates (while a positive in the short term, my biggest fear is the whoppingly huge inflation that's going to hit us at some point in the future). Unemployment isn't falling, so while that's bad for sentiment it probably means inflation will be held off for a few years (will be watching like a hawk for when unemployment reverses)
- Sentiment; still very much subdued but as always, opportunities exist in good areas
- Victoria is getting pummeled economically

Part of me wants to take advantage of these record low rates - we all know what they do to asset prices. The other side of me is weighed down by inflation risks and the overall poor sentiment and outlook for investing in the short term.

Keen to hear any thoughts you may have considering your extensive experience over the years and you've probably been through almost all ups and dows! (others are welcome to chime in too of course)

Thanks.

KJM
 
I bought a place last week. 3 bed terrace in Paddington. It's more than liveable, although in a few years I might do some rennovations. RE agents thought things were still pretty weak, although prices have somewhat recovered. They're definately not seeing the volume they used to.

If you're buying apartments in the capital cities, then know that you're competing with Chinese buyers who are not necessarily interested in yield.:2twocents
 
McLovin said:
I bought a place last week. 3 bed terrace in Paddington. It's more than liveable, although in a few years I might do some rennovations. RE agents thought things were still pretty weak, although prices have somewhat recovered. They're definately not seeing the volume they used to.

If you're buying apartments in the capital cities, then know that you're competing with Chinese buyers who are not necessarily interested in yield.:2twocents
Click to expand...

Is this somewhere you are planning to live or investment?
 
With enough equity and enough time Property will always be a sound investment.

The rest will be argued infinitum!
 
KurwaJegoMac said:
Hi Tech/a,

Given the issues currently going on in your industry what are your thoughts on purchasing RE now?

I've been considering an apartment in Victoria - I'm haggling with a distressed vendor in a good inner-city location; currently sitting at a price 10% cheaper than what they paid for 2 years ago off the plan.

The way I see it is this:

Pros:
- Record low interest rates (will we ever see something like this again, I don't know)
- Investor finance is well on the increase (up 21% last month, compared to owner-occupier 7%). I see it as a strong point (kind of like the stockmarket when the big boys get in before the general public; somehow I don't see too many in the general public confident enough to invest right now)
- Shortage of construction may equate to shortage of available dwellings
- Rents are rising

Cons:
- Record low interst rates (while a positive in the short term, my biggest fear is the whoppingly huge inflation that's going to hit us at some point in the future). Unemployment isn't falling, so while that's bad for sentiment it probably means inflation will be held off for a few years (will be watching like a hawk for when unemployment reverses)
- Sentiment; still very much subdued but as always, opportunities exist in good areas
- Victoria is getting pummeled economically

Part of me wants to take advantage of these record low rates - we all know what they do to asset prices. The other side of me is weighed down by inflation risks and the overall poor sentiment and outlook for investing in the short term.

Keen to hear any thoughts you may have considering your extensive experience over the years and you've probably been through almost all ups and dows! (others are welcome to chime in too of course)

Thanks.

KJM
Click to expand...


I would have a good think about it. I would think that the 10% discount could be gotten from alot of inner city sellers from what they paid 2-3 yrs ago, distressed or otherwise. Many bought these properties thinking they would flip it when the properties completed. With the economic situation deteriorating and dearth of apartments in the pipeline (quick search reveals > 300 for sale in docklands now) in the next 3 years, it will be a difficult market. just my :2twocents.
 
McLovin said:
If you're buying apartments in the capital cities, then know that you're competing with Chinese buyers who are not necessarily interested in yield.:2twocents
Click to expand...

Interesting. You're not the first person I've heard say that, and indeed, I agree with you. However, I do wonder where all these wealthy Chinese are getting their money from? My friend thinks they are corrupt Chinese government officials sending their money overseas and basically laundered into our real property to get it out of the hands of the Chinese government if caught.
 
Tyler Durden said:
Interesting. You're not the first person I've heard say that, and indeed, I agree with you. However, I do wonder where all these wealthy Chinese are getting their money from? My friend thinks they are corrupt Chinese government officials sending their money overseas and basically laundered into our real property to get it out of the hands of the Chinese government if caught.
Click to expand...

Some is , some isn't Tyler. We know plenty of wealthy upper middle class that would rather buy overseas real estate because it's better value than china. Also, chinas cities are very polluted and they all want a foreign education for thier kids. Some of these people are wealthy entrepreneurs, with funds accumulated through this massive bubble.

Then there are also plenty of corrupt government officials and senior officers of chinas state owned enterprises.

Very tricky to get the money out though, 50k per year is the max currency conversion per person.

CanOz
 
CanOz said:
Some is , some isn't Tyler. We know plenty of wealthy upper middle class that would rather buy overseas real estate because it's better value than china. Also, chinas cities are very polluted and they all want a foreign education for thier kids. Some of these people are wealthy entrepreneurs, with funds accumulated through this massive bubble.

Then there are also plenty of corrupt government officials and senior officers of chinas state owned enterprises.

Very tricky to get the money out though, 50k per year is the max currency conversion per person.

CanOz
Click to expand...

Thanks for the insight CanOz. Do you think that means bad news for Oz property if bubble in China is pricked?
 
CanOz said:
Very tricky to get the money out though, 50k per year is the max currency conversion per person.

CanOz
Click to expand...

Which, from my understanding, is about as enforced as the laws in Australia relating to non-resident, non-citizens buying residential property.;)

I've been going to a few auctions lately, and I'll say that once you hit the $1.2-$1.3m mark it's all foreigners.
 

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