House prices to keep falling for years

[numbercruncher]

Is Australia driven by our booming Labour market ??

Demand for skilled workers continues to weaken in a further sign that unemployment will rise in coming months.

The Department of Education, Employment and Workplace Relations (DEEWR) skilled vacancies index in November dropped 4.8 per cent, to be 29.1 per cent lower than a year earlier.

Vacancies fell in all three occupational groups monitored by the department.

Trade vacancies declined 5.3 per cent, associate professionals fell 5.7 per cent and professionals dropped 3.4 per cent.

http://news.smh.com.au/business/skilled-vacancies-drop-48-in-november-20081126-6i66.html

 

[Beej]

Same chap called a crash in 2004 ...

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

Maybe hes Bipolar ?

Many people here were making the crash prediction that far back too! And in 3-4 years we will be looking but at this thread in the exact same light

PS: That 2004 article doesn't actually predict a national housing market crash at all anyway, it seemed to be talking more specifically about the Melbourne inner city unit glut at that time, and prediciting pain for negatively geared investors in those types of properties specifically, also stating he thought OOs would be fine:

There's little doubt the cycle's correction phase will involve big falls in house and apartment prices, and I expect thousands of negatively geared investors to do a lot of dough. But I don't expect much damage to owner-occupiers and, hence, the macro economy.

Of course, no one can be sure whether the landing will be soft or hard. All we can say is we won't know until well after the federal election.

Cheers,

Beej

 

[Pommiegranite]

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

Soft Landings

2 men are pushed out an aeroplane, one with a parachute and one without.

The victim with the parachute represents a property where the owner has a job, and therefore survives the fall.

The jumper without a parachute represents a property where the owner has just lost his job, and therefore dies.

Soft landing or not, the guy with the parachute has plumetted the same amount as the guy without the parachute.

Its not how soft the landing is, its about how far the ground is.

 

[numbercruncher]

Well said Pommie

 

[Beej]

Soft Landings

2 men are pushed out an aeroplane, one with a parachute and one without.

The victim with the parachute represents a property where the owner has a job, and therefore survives the fall.

The jumper without a parachute represents a property where the owner has just lost his job, and therefore dies.

Soft landing or not, the guy with the parachute has plumetted the same amount as the guy without the parachute.

Its not how soft the landing is, its about how far the ground is.

An amusing, but completely irrelevant analogy!

PS: A better analogy would say the soft landing guy is the pilot - who stayed in the air after the other two jumped out (of the market!)

Beej

 

[ROE]

Meanwhile, the once booming Perth property market has recorded its third consecutive quarterly fall in the median house price - a phenomenon not seen in 25 years - as talk of a recession eats into consumer confidence.

Real Estate Institute of Western Australia president Rob Druitt said the Perth market was moving into uncharted territory with a combination of falling house prices and dwindling sales.

--dont we have migrant keep coming to WA for work and they have shortage of accommodation there.. how can house price going backward there these guys must be bull****ing, it cant be true, how price double every 7 years.


By dollar value, the worst performing area is now Helensvale on the Queensland Gold Coast, but Sydney's affluent eastern suburbs also make the list.

"The highest average mortgage size for loans that are defaulting is in Bronte, on the eastern beaches of Sydney, where the average loan defaulting is $1.1 million," Mr McCarthy said.

-- this is a nice rich suburb everyone want to live in, how can price drop, it's impossible... How price double every 7 years.

and of course the good old argument WA and QLD is different from other states
like I said debt deflation is universal it doesnt care where you live in the world.

 

[chops_a_must]

There is no housing shortage. It's a furphy.

A whole heap of dwellings seem to come on the market early last year here.

But what I think is interesting, WA has been dragging the whole Australian economy along with it the last few years...yet everywhere else has gone along with it in terms of asset prices... yet wont come down with it. That argument confuses me.

Not many other places have had the wages growth that we've had, yet they are being priced as if they had.

Occupancy will become the big issue here now though. I live in a high specuvestor, rental area, and the amount of properties for sale around here is enormous. And not many of them are selling at all.

 

[gfresh]

I would like to know where these properties are going too.. this is what doesn't stack up for me.

I can pick suburbs on the GC with close to 300 properties for sale presently. Who is going to buy them? Who are the sellers? Where are all the hordes of young FHB's waiting to buy (on the goldcoast much older demographics) ? How long can they sit there?

Surely a property listed, removed, relisted, and sitting there for months must have a motivated seller that has to meet the market eventually. Seeing as they are persisting with the sale process, means they must require a sale. There are some here that have been on the market for some 6 months, a long time to hope for a turnaround.

Really, if interest rates are on their way down, demand is large, everybody has manageable debt, and prices are reasonable (as is claimed), they should all be selling themselves very easily.

 

[gfresh]

NZ's largest bank now requires 20% deposits as of Thursday

So... how long before that happens here? What makes us so special?

http://news.theage.com.au/business/anz-national-tightens-home-lending-rules-20081126-6ids.html

ANZ National, the largest bank in New Zealand, is requiring people buying a house to have a 20 per cent deposit.

The policy, which applies from Thursday to new loan applications, is a tightening from its previous position of a 10 per cent deposit.

Mortgage brokers said tightening of lending criteria is a trend and other lenders already require a 20 per cent deposit or offer a better interest rate for such loans.

The bank said each customer was treated as an individual and there was no "standard scenario".

But from Thursday, generally speaking, both its ANZ and National Bank brands will not be offering new lending in excess of 80 per cent loan to value ratio. This means a mortgage cannot be more than 80 per cent of the value of a property.

 

[Nyden]

NZ's largest bank now requires 20% deposits as of Thursday

So... how long before that happens here? What makes us so special?

http://news.theage.com.au/business/anz-national-tightens-home-lending-rules-20081126-6ids.html

Is it even 10% here; what with the first home buyers grant? I seem to recall commercials offering no deposit ... almost like Harvey Norman ... wish they offered no interest for 2 years as well!

 

[ROE]

I would like to know where these properties are going too.. this is what doesn't stack up for me.

I can pick suburbs on the GC with close to 300 properties for sale presently. Who is going to buy them? Who are the sellers? Where are all the hordes of young FHB's waiting to buy (on the goldcoast much older demographics) ? How long can they sit there?

Surely a property listed, removed, relisted, and sitting there for months must have a motivated seller that has to meet the market eventually. Seeing as they are persisting with the sale process, means they must require a sale. There are some here that have been on the market for some 6 months, a long time to hope for a turnaround.

Really, if interest rates are on their way down, demand is large, everybody has manageable debt, and prices are reasonable (as is claimed), they should all be selling themselves very easily.

We are different mate, our house price wont fall, people are just going to buy our property at higher price than we buy last year

that the jingle people give when they denied the fact..we don't know why it wont fall but it wont fall because we are different.
We are not Japan, or US or UK or Europe or like our neighbor NZ

we are Aussie oi oi oi.

I wonder where do they get the cash from? a tree out in the backyard?

Let take a mining boom not long ago ..stronger for longer was on everyone lips..China will consume us all, if it's not China, it will be India, then Vietnam. Oops what happen now look like China doesn't want our stuff any more, where the hell is India and Vietnam damn they don't seem to show up on the radar either

I quote oversea stuff too often, from now on I will quote Aussie stuff.
so they can tell we live in different states until it hits their states then I don't know what excuse they use next..we are in different suburbs?

 

[Nyden]

I quote oversea stuff too often, from now on I will quote Aussie stuff.
so they can tell we live in different states until it hits their states then I don't know what excuse they use next..we are in different suburbs?

Different house numbers mate, 30-50 won't fall 20% just because some from 1-29 have :

 

[ROE]

Many people here were making the crash prediction that far back too! And in 3-4 years we will be looking but at this thread in the exact same light

PS: That 2004 article doesn't actually predict a national housing market crash at all anyway, it seemed to be talking more specifically about the Melbourne inner city unit glut at that time, and prediciting pain for negatively geared investors in those types of properties specifically, also stating he thought OOs would be fine:



Cheers,

Beej

Actually house price doesn't need to fall for people money to go down the toilet because most borrow heavily and negative gear, so every year you subsidize someone rental and your money go down the toilet.

Should the unfortunate happen to those people, ie divorce, sick, out of a job..many years of money going down the toilet plus fore closure will ensure they drowned for many years to come

but just in case house price fall as well they are truly in the hell hole.

what debt give you in a boom it can also take it away in a bust and a whole lot more.

Ask Rupert Murdoch if you ever meet him, he tell you what debt can do to you ...he been through it and throught his sheer charm and luck he just manage to escape the hell hole...and vouch to never touch the leverage beast again

 

[joeyr46]

have seen a lot of things about supply demand driving prices more supply less demand = lower prices
More demand less supply = higher prices
Simple fundamentals
House prices are hard to judge because of skewed or wrong facts about supply demand but interest rates are simple (forget the idea that the fed says what interest rates are they follow along, rates are really set by supply demand just like everything else) when money is being borrowed rates rise (one of the assests we buy with the money is houses, there price goes up If we,re not borrowing money rates come down we don't buy houses as well as other assets.
Prices don't fall immediately but they do come down if the supply exceeds demand (or ability to buy) and that means if we have too much debt already they will come down like everything else as we repay debt in the next 4 to 5 years. If your an owner occupier (debt free you don't care or should'nt) but if you have mortgage as long as your still employed lower interest rates will help you pay it off sooner and as long as you stop thinking interms of your house being an investment the value doesn't matter. It's just a figure

 

[apra143]

I would like to know where these properties are going too.. this is what doesn't stack up for me.

I can pick suburbs on the GC with close to 300 properties for sale presently. Who is going to buy them? Who are the sellers? Where are all the hordes of young FHB's waiting to buy (on the goldcoast much older demographics) ? How long can they sit there?

Surely a property listed, removed, relisted, and sitting there for months must have a motivated seller that has to meet the market eventually. Seeing as they are persisting with the sale process, means they must require a sale. There are some here that have been on the market for some 6 months, a long time to hope for a turnaround.

Really, if interest rates are on their way down, demand is large, everybody has manageable debt, and prices are reasonable (as is claimed), they should all be selling themselves very easily.

Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.

I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen

Maybe a $300k property is more in my price range. Even then, job security (or ability to find a new job if I lost my current one) would be my #1 concern. Not touching the property market until the employment situation improves, I'd imagine others buyers would be doing the same thing. The improved FHB grant and rate cuts are simply not enough.

Wouldn't most FHB's be GenY's who have HECS debt and possibly a car to pay off (not to mention other credit card debts)? They would also be entering a very competitive global job market in possibly the worst financial conditions ever faced, with starting salaries in the $50k-$70k range. Let's not even touch the crazy prices for rent or property. It's hard to imagine such people even considering shouldering another ball and chain (aka mortgage), let alone starting a family. The mind boggles

 

[prawn_86]

Nice post Apra.

I am a bit younger than you, just coming out of uni next yr, and i know the odds of me getting a job in my industry are pretty slim, and even if i do i could be gone pretty quickly if this global meltdown continues.

I am lucky enough to have a partner, but we will just be diligently saving (the diff between rent and mortage plus a bit extra)for 5 or so years before we even consider buying a PPOR

 

[robots]

Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.

I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen

Maybe a $300k property is more in my price range. Even then, job security (or ability to find a new job if I lost my current one) would be my #1 concern. Not touching the property market until the employment situation improves, I'd imagine others buyers would be doing the same thing. The improved FHB grant and rate cuts are simply not enough.

Wouldn't most FHB's be GenY's who have HECS debt and possibly a car to pay off (not to mention other credit card debts)? They would also be entering a very competitive global job market in possibly the worst financial conditions the ever faced, with starting salaries in the $50k-$70k range. Let's not even touch the crazy prices for rent or property. It's hard to imagine such people even considering shouldering another ball and chain (aka mortgage), let alone starting a family. The mind boggles

hello,

hope everyone having a great day,

and rent is not a ball and chain? i am sure the pensioners and retiree's may have a different view

as many keep showing that graph practically no-one saves, but you doing well man

think about 20yrs, 25yrs or 30yrs down the track you will be 45+ and maybe living rent free as such, great position to be in even if that is your only venture into RE

keep up the good work, it gets easier

thankyou
robots

 

[prawn_86]

hello,

hope everyone having a great day,

and rent is not a ball and chain? i am sure the pensioners and retiree's may have a different view

as many keep showing that graph practically no-one saves, but you doing well man

think about 20yrs, 25yrs or 30yrs down the track you will be 45+ and maybe living rent free as such, great position to be in even if that is your only venture into RE

keep up the good work, it gets easier

thankyou
robots

Possibly your most readable and understandable post to date Robots

 

[Indie]

Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.

I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen

Maybe a $300k property is more in my price range. Even then, job security (or ability to find a new job if I lost my current one) would be my #1 concern. Not touching the property market until the employment situation improves, I'd imagine others buyers would be doing the same thing. The improved FHB grant and rate cuts are simply not enough.

Wouldn't most FHB's be GenY's who have HECS debt and possibly a car to pay off (not to mention other credit card debts)? They would also be entering a very competitive global job market in possibly the worst financial conditions ever faced, with starting salaries in the $50k-$70k range. Let's not even touch the crazy prices for rent or property. It's hard to imagine such people even considering shouldering another ball and chain (aka mortgage), let alone starting a family. The mind boggles

You are going to do very well with such a considered and unemotional approach to investing.

 

[Temjin]

Not if people are loosing their jobs. While the government plays down the impact the global crisis is having on Australia, the thing that will hit home hardest is the massive layoffs to come as local and international projects come to a halt. So what good are rate cuts and stimulus packages if so many jobs (including Govt jobs) are getting cut left, right and center? Less buyers and more defaults to come.

I'm a prospective FHB in Sydney, am 23, have a full-time graduate position and have enough saved to pay a 10% deposit (if using the FHB grant) for a $400k property. If I buy now, I would consider myself stuck paying off the mortgage (and HECS) for the best part of my life, and if I lost my job, what then? It's too risky in my opinion, unless I had a partner (dual income) - but that's not gonna happen

Maybe a $300k property is more in my price range. Even then, job security (or ability to find a new job if I lost my current one) would be my #1 concern. Not touching the property market until the employment situation improves, I'd imagine others buyers would be doing the same thing. The improved FHB grant and rate cuts are simply not enough.

Wouldn't most FHB's be GenY's who have HECS debt and possibly a car to pay off (not to mention other credit card debts)? They would also be entering a very competitive global job market in possibly the worst financial conditions ever faced, with starting salaries in the $50k-$70k range. Let's not even touch the crazy prices for rent or property. It's hard to imagine such people even considering shouldering another ball and chain (aka mortgage), let alone starting a family. The mind boggles

Well done apra. Your thinking alone will put you far ahead of the pack. Unfortunately, most people don't think like that because emotion tend to overpower them. The need to buy a house is just too strong to resist for them, and regardless of how unaffordable it is.