House prices to keep falling for years

Beej · 29 November 2008

IFocus said:
I guy I know is trying to sell his property in one of the Rockingham areas here in WA and last week the paper advertised it by mistake a $100K less than the asking price.

He had already dropped the price significantly before this

There was not one inquiry.

And yet the house I just sold in Sydney had over 80 people/groups look at it over only 4 weeks - go figure! Probably shows the difference between the Sydney market and others (as I keep pointing out). WA and SEQ are the main area's that got over-heated and pushed the national median price stats up in the past 2-3 years, while Sydney was much more subdued. As a result most falls in median prices from here on will come mainly from those 2 areas IMO, and Sydney (+probably Melbourne) will slowly come up from the bottom which they seem to be bouncing along about now, with some outstanding opportunities for both PPOR upgrading and investment presenting themselves.

Deals like the one I am looking at just confirm this IMO - the rental yields are getting so good that the risk of investing is lower than it has been for many a year - who can remember a time when cash-flow positive from day 1 residential R/E investment options were available in Sydney? Why become paralysed by fear of what is only short term capital risk when for zero $$ invested up front now you can set up a long term cash generation machine for yourself? Plus get long term capital appreciation as well?

Cheers,

Beej

Glen48 · 29 November 2008

Nab have online a presentation about the economy:
Try Economic Presentation given by Spiros
> Papadopoulos, Senior Economist, nabCapital on Wednesday

numbercruncher · 29 November 2008

ANZ and NAB nowrequire 20pc deposit for NZ homebuyers ....

Hope they do the same here - makes it real again

ROE · 29 November 2008

Beej said:
The statistics presented in this article for October mirror exactly what I saw out there actually looking + selling and buying during Oct/Nov.

FYI - I'm looking at a unit in Sydney at the moment in a blue chip area close to harbour, CBD etc that is currently providing a NET (after costs) rental return of 5%. Given that there are fixed rates currently available at 4.99% (which from Dec I reckon you would be able to lock in for 3+ years), that means I could finance it 100% and be neutrally geared from day one. As rents increase it will turn quickly into a source of positive cashflow, with $0 up front capital invested by me. Plus being in a blue chip area of Sydney, I still believe that the long term capital growth prospects would be very good - at an absolute minimum inflation plus a bit, and at best a lot more than that. These are the sorts of opportunities that are out there RIGHT NOW if you get out and look - and given those numbers, I really can't see this situation lasting for too much longer.....

Cheers,

Beej

good deal, get it before you price out forever or someone put in a higher price

IFocus · 29 November 2008

Beej said:
WA and SEQ are the main area's that got over-heated and pushed the national median price stats up in the past 2-3 years
Beej

Yes certainly the case here in WA

juddy · 29 November 2008

Something I'm not aware of and can't find the answer to. Just thought some of the brains on here might be able to answer it.

In US mortgage holders can just walk away from their mortgages whereas in Aust. bankruptcy excludes mortgage and HECS fees. What about the UK?

CamKawa · 29 November 2008

juddy said:
Something I'm not aware of and can't find the answer to. Just thought some of the brains on here might be able to answer it.

In US mortgage holders can just walk away from their mortgages whereas in Aust. bankruptcy excludes mortgage and HECS fees. What about the UK?

Dunno about the UK but I didn't realize that even going bankrupt couldn't get you out of your mortgage here.

"Going bankrupt will not cancel your mortgage, HECS repayments or court fines."
source: http://www.abc.net.au/cgi-bin/common/printfriendly.pl?/catapult/basics/s1555121.htm

Specuvestors in Australia could be in for a world of pain.

MR. · 29 November 2008

Beej said:
WA and SEQ are the main area's that got over-heated and pushed the national median price stats up in the past 2-3 years, while Sydney was much more subdued. As a result most falls in median prices from here on will come mainly from those 2 areas

SEQ (South East Queensland) its a bit of a mess here. RayWhite (Northern Gold Coast) auctioned 20 odd properties Wednesday just gone. None sold prior to auction and none sold under the hammer. First time this has happened here. Last month was awful too, but better than this month, with two sold before auction and a few under the hammer. Buyers here are few and far between. Lots of lookers but few making offers of any substance.

Properties are building up "FOR SALE" because they are slow to move.

A house around the corner was bought as a renovator earlier this year with a recommendation by an agent. It was renovatored, went to auction a few months ago and didn't sell. The price was not high enough at 1.2 million. They wanted 1.3 million. Two months later (last month) the property went to auction "again". The highest price after auction was 1.125 million. The vendors didn't sell. The house I noticed last week has no FOR SALE sign out the front and it is up for rent. They wanted more than 1.3 million. The last offer was at 1.125 million. They are not following the market down.
I wonder how this will end after the tennants do a bit of damage.

As for the "Australian" article above. I assume there's a conflict of interest here by the interviewed.

robots · 29 November 2008

hello,

fantastic news out from the recovery article, Melbourne plodding along well and with the colonel at RBA reducing IR for the "money renters' next week paradise is rolling on man,

its going to be an embarrassing sight for people with all those dollars in those ing direct and other online "high interest" accounts, they will have to take "high interest" out of the marketing campaign

bloody hell what happened to the 10% interest rates for the money renter?

no big deal brothers, rent, buy, squat, mobile home, trailer park, tent, tee pee its all available in this great place,

thankyou
robots

So_Cynical · 29 November 2008

robots said:
hello,

fantastic news out from the recovery article, Melbourne plodding along well and with the colonel at RBA reducing IR for the "money renters' next week paradise is rolling on man,

robots u used the words Melbourne and Paradise in the same sentence. :nono::thankyou:

robots · 29 November 2008

hello,

yes thank you

thankyou
robots

So_Cynical · 29 November 2008

Nov 29, The Age - Home buyers walking away from the top end of town.

LUXURY house buyers are walking away from deposits worth up to $400,000, preferring
to forfeit the cash rather than pay millions more in the midst of a financial crisis.

The deposit dilemma comes as investors offload what has become a major extravagance,
the holiday house at the beach. More than four times the number of properties are listed
for sale in towns such as Lorne and Torquay than at this time last year.

Agents say a buyer last week failed to pay more than $3 million to settle the sale of a
Victorian terrace in one of South Yarra's most distinguished streets after agreeing to
buy it in July.

http://www.theage.com.au/national/h...y-from-the-top-end-of-town-20081128-6n0y.html

numbercruncher · 29 November 2008

Yes 400k is nothing for Melbournites to throw away on a wager they reckon , be it houses or crown casino - same difference !!

wayneL · 30 November 2008

FRom the Financial Times - enjoy:

http://www.ft.com/cms/s/0/408e23ec-bd8e-11dd-bba1-0000779fd18c.html?nclick_check=1

Investors bet on record property crash

By Daniel Thomas, Property Correspondent

Published: November 28 2008 21:48 | Last updated: November 28 2008 21:48

House prices could fall 30 per cent over the next two years in what would be the worst crash on record, according to the price of contracts being traded on the derivatives market.

Investors are betting hundreds of millions of pounds on expectations that house prices could lose nearly half their peak value, say brokers. They also suggest that the housing market will not return to today’s level of pricing for another 10 years.
EDITOR’S CHOICE
Investor buys entire street at cut prices - Nov-27
Incentives lower prices of new-build homes - Nov-11
Blow for homeowners sparks reform call - Nov-10
House prices drop 14.6% year-on-year - Oct-30
Cash-flow warning for employers - Oct-29
Slump hits London’s richest homeowners - Oct-28

Contracts being traded suggest the market will bottom out sometime in 2010, based on the Halifax house price index.

There has already been a drop of around 16 per cent in home prices so far since the market turned last year.

“There is a 45-50 per cent drop in house prices predicted peak-to-trough by trading of contracts on future house prices,” said Philip Ljubic, a property derivatives trader at Royal Bank of Scotland.

robots · 30 November 2008

hello,

ring the bell can you when it happens in Aus, seems still plenty of money to waste on gambling,

so much for tough times, fairytale?

thankyou
robots

juddy · 30 November 2008

juddy said:
Something I'm not aware of and can't find the answer to. Just thought some of the brains on here might be able to answer it.

In US mortgage holders can just walk away from their mortgages whereas in Aust. bankruptcy excludes mortgage and HECS fees. What about the UK?

I think I found it. Very similar to Australia from what I can see (am no bankruptcy expert). Debt must be paid through forced sale, plus any equity in property is taken to pay other debts?

Some sad stories here.

http://myvesta.org.uk/faq/categories/Bankruptcy/Property+-+UK/

Is that right Wayne?

xoa · 30 November 2008

wayneL said:
FRom the Financial Times - enjoy:

http://www.ft.com/cms/s/0/408e23ec-bd8e-11dd-bba1-0000779fd18c.html?nclick_check=1

Wow.. if UK prices fall another 30%, I'm definitely going to have to move there. Speculators' pain is ordinary people's gain.

Beej · 30 November 2008

Sydney auction clearance rate 47% for the weekend - 181/382 sold: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Cheers,

Beej

ROE · 30 November 2008

One thing people haven't factor in is that housing index derivatives are going to start trading on the ASX in the next 2 years.

That going to make housing hell more volatile and people can now short on housing bubble

I be joining the shorter on this one if the price currently sit at this level...and if price start the decline it set the trend for shorter to come in and bell the hell out of it.

professor_frink · 30 November 2008

ROE said:
One thing people haven't factor in is that housing index derivatives are going to start trading on the ASX in the next 2 years.

That going to make housing hell more volatile and people can now short on housing bubble

I be joining the shorter on this one if the price currently sit at this level...and if price start the decline it set the trend for shorter to come in and bell the hell out of it.

anyone taking bets as to how long it will be before shorting is banned on that one

House prices to keep falling for years

Beej

Glen48

Money can't buy Poverty

numbercruncher

Beware of Dropbears

ROE

IFocus

You are arguing with a Galah

juddy

CamKawa

MR.

robots

hello

So_Cynical

The Contrarian Averager

robots

hello

So_Cynical

The Contrarian Averager

numbercruncher

Beware of Dropbears

wayneL

VIVA LA LIBERTAD, CARAJO!

robots

hello

juddy

xoa

Beej

ROE

professor_frink

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