House prices to keep falling for years

[Aussiejeff]

Best wishes & a speedy recovery Explod

Echo..echo....echo.....

Not too much sitting, ok?


Cheers,

aj

 

[explod]

Echo..echo....echo.....

Not too much sitting, ok?


Cheers,

aj

Good point and thanks for the reminder AussieJeff. Tendency to come and argue with you guys gets a bit strong sometimes.

Thanks everyone for the kind thoughts. I am going to be fine.

regards explod

 

[gfresh]

Stay fighting fit explod! contributions are always welcome for a different perspective.

 

[Temjin]

Good point and thanks for the reminder AussieJeff. Tendency to come and argue with you guys gets a bit strong sometimes.

Thanks everyone for the kind thoughts. I am going to be fine.

regards explod

Take good care of ur health, explod. It's a much higher priority than trying to argue on the internet. Best wishes for a speedy recovery.

 

[Glen48]

ABC radio to day told of Melbourne houses prices down 10% another Female buyer explained its a good time to buy rates going down, house prices going down.. she deserves to own a home with statements like that.

 

[IFocus]

Apparently its all OK Robots is right


THE economics of Australia's $3.3 trillion housing market is widely misunderstood, with sensationalist claims that a housing bubble caused the global credit crisis and that Australian house prices will fall by 30 per cent to 50 per cent.

http://www.theaustralian.news.com.au/story/0,25197,24742139-5013480,00.html

 

[numbercruncher]

Apparently its all OK Robots is right


THE economics of Australia's $3.3 trillion housing market is widely misunderstood, with sensationalist claims that a housing bubble caused the global credit crisis and that Australian house prices will fall by 30 per cent to 50 per cent.

http://www.theaustralian.news.com.au/story/0,25197,24742139-5013480,00.html

The author of that article, Christopher Joye, makes his living out of the property bubble via rismark international.

 

[robots]

Then why do take everyone on. Many of us are not pleased with the way economics is being played out and some on this forum do know about economics.

In the last few months on a global scale we have had unprecedented deflation. That word means that shares, bonds, trust, businesses and property have droped by half and in some cases by 3 times. These falls are growing by the day. Wall Street just in one night (last night) by 10% (one tenth

Interest rates are being dropped just to try and save basic business (and of course home owners etc) from total collapse. It has not worked overseas and it will not work here. Japan for the first time in perhaps 10 years have just seen the economic light in the last few days and might start to raise rates. The underlying rates are going up because no one wants to lend money. When these last few rate cuts play out by about March next year they will rise again just as fast as they have fallen.

Now the way I have put this is an oversimplification but should help you Robots. Wish I had had someone to explain these things to me when I was a builders labourer in 1961. They paid us 17pound ($34) a week tax paid back then and a brand new car cost $1,000

And the more savvy smart a...ss leave robots and I alone

hello,

yeah leave "us" alone,

what a fantastic day, great report out from Rismark a fine institution (you would be all over it if something else was revealed)

hope everyone is well and goodluck

thankyou
robots

 

[Beej]

The author of that article, Christopher Joye, makes his living out of the property bubble via rismark international.

Gee, he must have some pretty sound facts and arguments there then - you can always tell that if you guys "play the man" rather than "the ball"

Eg:

Recent analysis by the Reserve Bank of Australia has comprehensively demonstrated that housing affordability is not at an all-time low. According to one of the Reserve Bank's benchmarks, the representative household in June 2007 had more real disposable income left over after purchasing a home and servicing a 90per cent mortgage than at any other time since June 1982.

The bank also found that the representative household could afford to buy 33 per cent of all homes in June 2007, which, although less than the historical average of 45 per cent, was markedly better than the 13 per cent of homes available to it in June 1990.

and:

Perhaps the best insight into mortgage stress is default rates. Only 0.4per cent of all home loans on Australian bank balance-sheets were delinquent in August 2008, a fraction of equivalent rates in the US (more than 2.5 per cent) and Britain (1.3 per cent). The Reserve Bank has noted that although August was the peak of its recent monetary policy cycle, Australian delinquency rates were still materially lower than levels experienced in the mid-1990s.

and some more good stuff:

The Reserve Bank believes Australia's housing market is leading the US by three years, having entered into its downturn in 2004. There is also a consensus between the Reserve Bank and most economists that the doomsayers' predictions will be proven wrong. A striking counterfactual is the 1990-92 recession, when unemployment hit 10.9 per cent yet house prices rose by 2 per cent a year according to the Australian Bureau of Statistics.

But I guess this whole article and all the facts therein can just be ignored because this guy is somehow a part of the great property ramping conspiracy/cartel!

Cheers,

Beej

 

[explod]

hello,

yeah leave "us" alone,

what a fantastic day, great report out from Rismark a fine institution (you would be all over it if something else was revealed)

hope everyone is well and goodluck

thankyou
robots

Well I probably would not emphasise it too much ole pal, the ice is very thin at times

 

[numbercruncher]

More good news for the property permabulls - the QLD Government has introduced legislation making it illegal for banks to sell reposessed houses below " market value " !

Isnt it just amazing how much the Government is getting behind the bubble ?

The lengths they are going to is phenomenal ! How is this goign to be policed though ?

if a property is sent to auction no reserve, the selling price is surely market value ?

Premier Anna Bligh on Wednesday announced that laws would be fast-tracked through parliament this week to prevent financial institutions intentionally selling repossessed properties at below market value.

http://www.brisbanetimes.com.au/news/queen...8257105517.html

 

[drsmith]

Market value is what the highest bidder is prepared to pay on any given day so this sounds like nothing more than an exercise in political spin by the QLD government.

 

[gfresh]

All of the points in that Australian article have been dismissed previously in here..

The usual stuff over shortage of supply, which again is very difficult to quantify in real terms as people share, live with parents, move around, a lot more. That just as much a questionable "fact" as some of the more bearish beliefs.

The fact the RBA's belief that the market peaked in 2004 is farcical.. maybe this is true for Sydney, but for the other states, no.

British house prices have fallen only 6% that is contrary to all other data I have read from over there.. Soon as they start saying "..but but .. the sharemarket has fallen more, yes, it has so there", you can tell they have a weak argument. That is not the point.

The article also compares affordability too simply by saying "rates have dropped, therefore property is more affordable". Yes, in simple terms, but there is a lot more to it than that, the wealth of many in the middle to higher end has really been wiped by share market crashes, corporate collapses, bankruptcy, and other issues are rising also. Lower end next 2009 may also effect a lot more in other areas of the market too. This also effects "affordability" for those in those markets doesn't it.

Debt levels are the problem for existing home owners, which is very hard to quantify until hard times are experienced by a family when existing debts need to be serviced with reduced, or a job loss. You can take on as much debt as you like, as long as you can meet the minimum repayments. The only problem is when you can't even meet those minimum payments as a result of job loss, illness, etc.

Those default rates are also old data as well.. it's now doubled to 0.8% and could well be rising. If you look at certain areas (Helensvale, QLD say), it's in the order of several percent..

Fitch Ratings said mortgage performance was expected to continue to deteriorate on the back of the Christmas spending season and the rapidly slowing economy.

``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.

If you've got 1 in 50 people missing a payment, I would think things aren't going that well out there.

Hard to tell the bank's lending capabilities heading into 2009 to be honest as longer-term funding has to be rolled over from o/s, and in the case of a recession hitting, many businesses will be defaulting on their loans, individuals will be defaulting on their credit cards, etc, etc. This will impact on the amount that can be lent as risk management goes into overdrive.

Already ANZ looking weak, requiring 90% LVR, refusing to pass on the full rate from yesterday, still exposed massively to Centro. Read today that the banks' hedging against US Centro has blown up due to heavy falls in Aussie dollar, furthering their exposure, We will hear more on ANZ soon I'm sure.

Token bear articles:

http://www.goldcoast.com.au/article/2008/12/03/28105_gold-coast-real-estate.html

http://www.goldcoast.com.au/article/2008/12/03/28135_gold-coast-real-estate.html - 20% of Goldcoast agents calling it quits, what a shame.

GOLD Coast real estate agents have felt the fury of the financial crisis, with their numbers falling by a fifth, according to a senior industry figure.

Real Estate Institute of Queensland Gold Coast chairman Peter McGrath estimated 20 per cent of real estate agents had quit property.

"There's definitely been a drop-off of at least 20 per cent in people working in agencies," he said.

"On the Gold Coast we experienced an exceptional time in real estate and had a lot of people join the industry in that time, so there were a lot of agents who had only ever seen the good times."

The boom times began to fade in late 2007 with the onset of the subprime crisis, and things became tougher, he said.

 

[Beej]

All of the points in that Australian article have been dismissed previously in here..

Yes well, I would tend to believe the analysis, data and views of the RBA with all their resources, expertise, and their ability to actually influence/manage economic matters through monetary policy, over a bunch of unknown screen names espousing gloomy and unproven views on a kooky internet forum anyway. But hey, that's just my opinion

EDIT: And just to debunk one point directly - pockets of real estate slump are never hard to find - see western Sydney between 2004 and 2007, but strangely no-one is pointing at those area's anymore as the prices there are actually recovering now.... Currently it is SEQs turn - big deal, and the Gold Coast in particular, which has always been the original "land of the white shoe brigade" with a rich history of shonky real estate deals pushed on unsuspecting punters who later get burned - nothing new there whatsoever! Certainly no evidence of some sort of nation-wide crash or catastrophe...

Beej

 

[gfresh]

Of course the RBA knows best, rising interest rates as the rest of the world was faultering, and failing to see the true extent of the crisis, when even amateurs on ASF were talking about how it would get much worse 12 months ago.

 

[robots]

Yes well, I would tend to believe the analysis, data and views of the RBA with all their resources, expertise, and their ability to actually influence/manage economic matters through monetary policy, over a bunch of unknown screen names espousing gloomy and unproven views on a kooky internet forum anyway. But hey, that's just my opinion

Beej

hello,

hahaha, great writings Beej

a lot of professors around these days, you get a blog and you a guru, read a blog and you a guru on all matters

and life just keeps rolling on man,

just worked out going to pay off one mortgage 3yrs quicker if keep up same payments, so have gone from 25yr to 21yr to 18yr

dont know what to do with all the money? this is unbelievable

thankyou
robots

 

[Beej]

Of course the RBA knows best, rising interest rates as the rest of the world was faultering, and failing to see the true extent of the crisis, when even amateurs on ASF were talking about how it would get much worse 12 months ago.

Well maybe you guys should all lobby for posts on the RBA board then??? Or maybe you just got lucky? Anyone can get a call right every now and then if you say it for long enough?

Personally I'm not convinced the RBA was wrong last year anyway - conditions here were very different to most other western economies. It may yet turn out that we have a shorter and shallower downturn that the US, UK etc (Ie, a similar situation as for Canada), due the delay in the impact of the global situation hitting home here, plus the amount of fiscal and monetary stimulus available. If this turns out to be the case the RBA will be applauded.

I guess a key thing to understand with economics is there are no certainties - only probabilities.

But I am still confident the bears on this thread will all be proven wrong re the great Australian real estate price crash that isn't going to happen. Time will tell!

Beej

 

[Glen48]

The RBA went wrong putting up rates in March 08.
Those sleeping at night should be able to hear the $$ ticking away as their property is depreciating.

 

[robots]

The RBA went wrong putting up rates in March 08.
Those sleeping at night should be able to hear the $$ ticking away as their property is depreciating.

hello,

all appreciating here in St Kilda Glen48, 14.7% Sept 08, $$$ in my eyes

i know i know, I have to wait it takes time 6mths, 1 yr

thankyou
robots

 

[grace]

The RBA went wrong putting up rates in March 08.
Those sleeping at night should be able to hear the $$ ticking away as their property is depreciating.

I live in the bush. Auctions on rural property are now getting cancelled. No inspections, noone at auction. Buyers have gone. It is so illiquid. Lucky we are future buyers not sellers.