House prices to keep falling for years

Beej said:

No - RENT the house out to crooks who take care of 2) and 3) and charge an appropriate rent premium! That way you don't carry either the financial, or the "freedom" risk

Beej

Click to expand...

Now we're getting somewhere. I'm open to investing in RE again and this looks like an interesting opportunity. I was wondering where the next "driver" for economic growth was going to come from. I'm in.

ROE said:

but most of my stuff are facts, go and research on Japanese property market and US current property market.

LA properties been going backward every single quarters for the last few years.. Read on all economics book, they tell you what happen when
you got a debt deflation come into the economy.

2 things are certain that is death and tax and in economic
1 thing is certain when debt deflate, asset depreciate.

but what economy got to do with it stupid, house price double every seven years go property go the debt deflation is too close to the truth and too scary for some

Click to expand...

You obviously need to research Japan a lot more. Up to 97% of Japan is not migrant. Don't have home ownership culture like us and no negative gearing. Still silly comparison.

hello,

good evening fellow trolls, whats happening?

quiet on the RE scene today with all the shonk exchange action, just business as usual for many I guess in this fine country

away she goes,

thankyou
robots

Hey everyone,
I've been lurking here for over two months and I've decided it's time to post with my dilemma.

I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.

I'm keen to make the jump at some point to purchase a house and have been patiently waiting for the last couple of years for prices to either drop or stabalise, realistically I should have bought two years ago prior to the massive price rises, but I didn't.

Do you think that prices will drop in the ACT or will they remain stable because of the government and defence housing requirements?

Should I take the plunge now and buy a one bedroom apartment off the plan taking account of the 21k from the government?

Or should I sit tight keep saving and just wait a little longer?

boxoid

Hello

Bit of stress getting around apparently ?

Rich stressed as bonuses culled
Tuesday, 25 November 2008

Amanda Gome

The number of stressed households fell by 3% in the last month to 770,000, says a survey from business service provider Fujitsu Australia and New Zealand. However affluent stress (those who live in the northern beaches of Sydney) went up 7% due to lower or no bonuses and margin calls.

And small businesses are doing it particularly hard, with households reliant on incomes from the SME sector concerned about their future earning prospects. As a result they are pulling back on their discretionary spending, says the latest edition of the Mortgage Stress Survey released today.

The survey based on a rolling 26,000-consumer survey updated monthly found that many households were now concerned about falling investment returns and the spectre of rising unemployment.

The survey also found that those in severe stress rose by 13% to 291,000. Severe stressed households are more likely to be forced to refinance or sell in the coming months.

With unemployment now forecast by the Treasury to rise to 5% by June 2009, Fujitsu Consulting estimates that total stress will rise to over 1.1 million households by the same time frame, with 433,000 households likely to be in severe stress.

Click to expand...

http://www.smartcompany.com.au/Free-Articl...ses-culled.html

boxoid said:

Hey everyone,
I've been lurking here for over two months and I've decided it's time to post with my dilemma.

I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.

I'm keen to make the jump at some point to purchase a house and have been patiently waiting for the last couple of years for prices to either drop or stabalise, realistically I should have bought two years ago prior to the massive price rises, but I didn't.

Do you think that prices will drop in the ACT or will they remain stable because of the government and defence housing requirements?

Should I take the plunge now and buy a one bedroom apartment off the plan taking account of the 21k from the government?

Or should I sit tight keep saving and just wait a little longer?

boxoid

Click to expand...

hello,

gfresh has posted some great extrapolations of the buying equation and g may post again,

if you in for the long haul go for it, go and look at new construction (off the plan) and then please please go and look at current existing apartments especially those 15-25yrs old,

save, save, save

thankyou
robots

Buy now and get cashtrated....save ..save... save buy in years time.

boxoid said:

Hey everyone,
I've been lurking here for over two months and I've decided it's time to post with my dilemma.

I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.

I'm keen to make the jump at some point to purchase a house and have been patiently waiting for the last couple of years for prices to either drop or stabalise, realistically I should have bought two years ago prior to the massive price rises, but I didn't.

Do you think that prices will drop in the ACT or will they remain stable because of the government and defence housing requirements?

Should I take the plunge now and buy a one bedroom apartment off the plan taking account of the 21k from the government?

Or should I sit tight keep saving and just wait a little longer?

boxoid

Click to expand...

Currently there no hurry, pricing wise the bias is to down side for 2009 and likely into 2010.

Ideally you buy when you can best afford a property, I think the current outlook is a move hopefully back to the mean of affordability no guarantee but the bias is in that direction.

No matter what you read here prices will fall or at least soften as the economy slows and unemployment rises and confidence falls its a typical cycle.

Its worth doing your home work to buy the best you can afford in the best area that has shown steady consistent +10% grow over the last 30 years

If you can get you head around possible future demographics all the better

boxoid said:

Should I take the plunge now and buy a one bedroom apartment off the plan taking account of the 21k from the government

Click to expand...

Following on from Robots comment - why buy off the plan? More often than not you end up paying a premium that might far outweigh the FHB grant.

I would advise looking at second hand apartments and getting a good feel for prices and make sure the off the plan apartment price is competitive with established properties. In some rare cases they are but my experience is that they are typically priced at a significant premium to established properties.

The age of a property doesn't tend to determine its resale price - location, aspect, size, maintenance requirements are the primary drivers. New kitchens and bathrooms are relatively easy to put in when the time is right (i.e. ideally when you are ready to sell, not at the time you buy).

There are some depreciation tax benefits for off the plan but that rarely makes up for the premium paid.

Also location is the most important thing and usually the best locations already have existing established properties on them - new developments quite often are in a compromised location (not always though - look at the toaster on circular key in Sydney - a good example of where off the plan buying was a great idea and provided a unique opportunity).

Some thing more to ponder from Alan Kohler et al


I was brought up cold on the weekend when interviewing Lend Lease chief executive Greg Clarke for Inside Business on the ABC: He said: "People are off highly leveraged vehicles and the most highly leveraged vehicle in the world is the Australian household."

Actually, he's not quite correct. The most highly leveraged households in the world are those in the UK, where debt is 180% of annual disposable income, according to Shane Oliver of AMP Capital Investors. Australia is next on the household debt league table, at about 160% of disposable income.

Greg Clarke is from the UK and still spends a lot of time doing business there. He said: "I think the UK is going to see a once in 100 year economic event. I think it's probably looking at two to three years of recession." Australia's debt, don't forget, is not far below Britain's.

Analysts at Merrill Lynch have put out a research report describing Australia as the most "at risk" country in the world.

Echoing what everyone now says about the Australian economy, Clarke added that the "countervailing" factor to the high leverage of Australian households is that the Chinese economy is growing at 8%, which is "pretty good".

So we need China's domestic stimulus to work, and we need the rest of the world's governments to do their bit to soften the landing of the global economy so that China's exports don't collapse entirely.

Like most such things, the G20 meeting in Washington over the weekend was an expensive and elaborate piece of theatre, designed to soothe our fears and "talk up" the global economy. Action was put off till next year; with luck the show would do the trick.

In the same vein, Finance Minister Lindsay Tanner was on the ABC's Insider's program yesterday, refusing even to utter the word "deficit" for fear of harming confidence. No one in the government will mention the word for that reason, even though we all know a deficit is both inevitable and necessary.

The three forecasts for Australian GDP growth next year are: Treasury 2%; IMF 1.8%; Reserve Bank 1.5%. Bear in mind that Treasury's explanation for having a higher forecast than the Reserve Bank is that it is able to factor in rate cuts that the Reserve can't.

*****

This is undoubtedly one of the things Australia has going for it: its comparatively high interest rates offer plenty of scope for cutting. Money markets are pricing in a 100 basis point cut in the official cash rate in December. Whether or not that occurs, the cash rate target will be below 4% before long and probably at 3%. (It is now 5.25%.)

The other thing that we're supposed to have going for us - a big federal budget surplus - is disappearing fast.

As the global economy loses momentum far more quickly than anyone expected, with Europe in recession already, today's announcement that Japan has gone into recession, the UK headed for something approaching depression and China slowing down to some extent at least, the surplus has probably gone already.

boxoid said:

Hey everyone,
I've been lurking here for over two months and I've decided it's time to post with my dilemma.

I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.

I'm keen to make the jump at some point to purchase a house and have been patiently waiting for the last couple of years for prices to either drop or stabalise, realistically I should have bought two years ago prior to the massive price rises, but I didn't.

Do you think that prices will drop in the ACT or will they remain stable because of the government and defence housing requirements?

Should I take the plunge now and buy a one bedroom apartment off the plan taking account of the 21k from the government?

Or should I sit tight keep saving and just wait a little longer?

boxoid

Click to expand...

Canberra probably has one of the most unusual dynamics in the housing industry in Australia. Always a squeeze on rentals, as no-one wants to buy there, but a lot of highly paid workers with secure employment make it a good rental market.

Have you thought about getting something slightly larger to be able to take on someone to pay rent, at the same time as paying it off? There are some nice places in Canberra going up, or have recently gone up, that are quite large and nice apartment types.

Cheers.

chops_a_must said:

Canberra probably has one of the most unusual dynamics in the housing industry in Australia. Always a squeeze on rentals, as no-one wants to buy there, but a lot of highly paid workers with secure employment make it a good rental market.

Have you thought about getting something slightly larger to be able to take on someone to pay rent, at the same time as paying it off? There are some nice places in Canberra going up, or have recently gone up, that are quite large and nice apartment types.

Cheers.

Click to expand...

Now that is some good advice! When I was younger and bought my first place, I had flat-mate(s) in there most of the time paying my mortgage off for me Works a treat!

boxoid said:

Do you think that prices will drop in the ACT or will they remain stable because of the government and defence housing requirements?

Click to expand...

Re the timing right now, there is no particular need to rush in, but if you find the place you want in a location you like, and can negotiate a reasonable price (where the numbers work for YOU), then I'd say go for it. But remember it is a buyers market, and is likely to remain that way until the economy picks up some time in the future.

EDIT: Of course Canberra is a bit of a wild card in some respects, as it can be driven by different factors that may be out of phase with the broader economy.

Cheers,

Beej

boxoid said:

I'm single, living in Canberra, the second most expensive property market in the nation, working in a job where my tenure is pretty much guaranteed. I've saved a bit over $20k for a property and am currently in a townhouse where I'm paying $285 p/w rent. My wage is well over $60k.

Click to expand...

Howdy,

Might be worth crunching some numbers if you are keen on an off the plan property - it might be cheaper for you to buy as an investor, take advantage of deductability of interest, depreciation & holding costs, and continue to rent. FHOG is a nice carrot but over a cycle of a few years you still may come out in front as an investor rather than an occupier. With a higher net monthly cashflow, you will also have a little more in your pocket for other investments and/or living expenses. You can also consider living there for 12 months to obtain the FHOG, then moving out and then treating the property as a rental.

Good luck

..depends if you get stamp duty exemptions on PPOR in Canberra whether worth living there 12 months. In QLD basically no stamp duty at all for FHB primary residence - but have to live there 12 months.

Ahhh Goldcoast, beautiful one day... in heavy debt the next:

http://news.theage.com.au/business/mortgage-stress-in-vaucluse-gold-coast-20081126-6huf.html

Mortgage stress in Vaucluse, Gold Coast

November 26, 2008 - 9:45AM

Retirement mecca the Gold Coast and Sydney's blue-chip Vaucluse have joined struggling south-western Sydney as the areas suffering most from mortgage stress and loan defaults.

More than 840,000 residential mortgages - valued at $140 billion - were outstanding at the end of September, a global ratings agency has estimated, adding interest rate rises in late 2007 and 2008 were to blame.

Australian mortgage delinquency rose in the six months between April and September this year, Fitch Ratings said.

South-western and western Sydney remain the nation's mortgage stress hotspots, but there have been significant changes in the suburbs of Perth, South-East Queensland and NSW regional areas, such as Wollongong, Newcastle and the Central Coast.

Helensvale, on the Gold Coast, is the most mortgage-stressed suburb in Australia, but one of the nation's most affluent addresses - Vaucluse - is rated seventh worst by loan value.

The top 10 suburbs and towns listed as suffering the most mortgage stress are: Helensvale (Qld), Nelson Bay (NSW), Raymond Terrace (NSW), Katoomba (NSW), Greenacre (NSW), Guildford (NSW), Vaucluse (NSW), Fairfield (NSW), Cessnock (NSW) and St Marys (NSW).

Mortgage performance is expected to continue to deteriorate on the back of the Christmas spending season and the rapidly slowing economy, Fitch says.

"On a national basis, Australian mortgages, by value, that missed one or more payments, increased to 2.13 per cent from 1.88 per cent," said Ben McCarthy, from Structured Finance, who authored the Fitch report.

But a finding in the report suggests loans made between 2002 and 2007 are easier to service today than when the loan was first taken out.

"From this point of view if unemployment can remain subdued the Australian mortgage market will continue to perform well," Mr McCarthy said.

Click to expand...

Pommiegranite said:

If RE's success is linked with the big 4 bank's success, then why would anyone take a 5% yield in property at the top of a RE boom, when instead you can buy ANZ stock 50% off, with a 15% yield?

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I wonder if ANZ will stick to paying the same dividend thow with all this mess (and loss in profits)? can anyone confirm this?

Ross Gittins of SMH reckons housing here in AU will have a "soft landing", ie NO great price crash coming: http://business.smh.com.au/business/housing-heads-for-a-soft-landing-20081125-6hf0.html?page=2

Reads pretty much like a 2 page synopsis of the counter-crash arguments presented many times in this thread!

Cheers,

Beej

Beej said:

Ross Gittins of SMH reckons housing here in AU will have a "soft landing", ie NO great price crash coming: http://business.smh.com.au/business/housing-heads-for-a-soft-landing-20081125-6hf0.html?page=2

Reads pretty much like a 2 page synopsis of the counter-crash arguments presented many times in this thread!

Cheers,

Beej

Click to expand...

Same chap called a crash in 2004 ...

Prepare for a property crunch
By Ross Gittins
June 29, 2004

Click to expand...

http://www.theage.com.au/articles/2004/06/28/1088392600154.html

Maybe hes Bipolar ?

Beej said:

Ross Gittins of SMH reckons housing here in AU will have a "soft landing", ie NO great price crash coming: http://business.smh.com.au/business/housing-heads-for-a-soft-landing-20081125-6hf0.html?page=2

Reads pretty much like a 2 page synopsis of the counter-crash arguments presented many times in this thread!

Cheers,

Beej

Click to expand...

Deja Vu....

UK bulls tried to use the same arguments.

wayneL said:

Deja Vu....

UK bulls tried to use the same arguments.

Click to expand...

Yes well, that was obviously silly then because the UK property market was and is completely different to AU and driven by many different factors and circumstances!

Beej

wayneL said:

Deja Vu....

UK bulls tried to use the same arguments.

Click to expand...

Have to agree with this. The real truth though is that no one here really knows. We only know risk factors. The expected probability is of course a slight down, but there are other cases that could easily happen. The housing market is very illiquid and if unemployment keeps creeping up then the majority of the market doesn't matter, just the sellers coming in vs buyers and there isn't many of them in any markets atm - just that the sellers are holding on. You could say there is pent up demand (off market demand) but you could also say there is investors holding on (off market supply).