House prices to keep falling for years

[explod]

Sorry but that is all a load of rubbish. People on average incomes have ALWAYS had to make sacrifices to attain a home, car, raise family etc. I've never heard of ANYONE saying it has been easy......

The problem with the "youth of today" is that they all think that it should come easy, but it never has.

Cheers,

Beej

Yes and that is further rubbish. As a lad I could walk out of one job, go two doors and walk into another. No papaer work, just start working. Brought my first house for $2,000 sold it a few years later for $10,000. Life was really a walk in the park in the 1960's.

Can assure you it has been very a very much harder world for my chindren and granchildren. To thier credit they are doing well. But it is a much more difficult world than the old days.

And many branches of our society are maginalised due to their upbringing (not their fault) and lack of work and educational opportunities in the area they live. For the less educated and uninformed it is not so easy to move from a comfort zone and take on a new area to seek opportunities.

Easy to say things from the armchair but that is not where one learns reality.

Remember the old term, "we are all born equal, it is just that some are born more equal than others"

IMVHO of copurse.

 

[nioka]

The meaning of "afford" can be very subjective.

What do you consider to be affordable anyway? Back 15 years ago, my parents were able to "comfortably" afford an average side home, with an average size family car, take regular holidays, pay for me and my Brother education fee and still have some sort of saving while only earning an average family wage.

Now? People have to make SACRIFICE in order to do the same thing. Why does it have to come to that?

Sacrifice, what a word. It's just a word. Is doing without some unnecessary items to have a home a sacrifice. Is settling for a modest home that you can afford a sacrifice because you can't afford a Mansion. Is not trying to keep up with the Joneses a sacrifice?. Your parents, if they were like me, saved hard to get at least a sizeable deposit before they owned a car or a house. I suggest they lived within their means, did without a lot of "things" they would have liked and did not consider it a sacrifice.

 

[algis]

Not being able to send the keys in makes little difference if mortgage holders default and cannot pay. The banks will still be stuck in the same way.

The ability to simply walk away from your asset and leave it with the bank means that you can let the house depreciate and the bank is not going to put the same level of effort to get a good price if they have hundreds on their books. Leaving the debt of the house with the borrower stems this depreciation.

 

[algis]

This guy has some angst about Sydney property...
http://www.2thinknow.com/innovation/index.php/2008/03/18/australian-property-prices-will-fall-sydney-melbourne-property-crash/

But it's got me thinking, how does Sydney compare with London, New York, Paris etc..

It's not straightforward to compare pricing between the cities, as it depends on earning potential in the area, how close it is to major areas of employment and the general appeal of the location.

A brief scan of the web real estate directories suggests that there are a few 180 square metre properties that are located approx 30min from central London going for 800,000 quid.

Then there are a good number of 200-300 square metre properties in Brooklyn (about 10min from New York) going for 800,000USD.

1.5M AUD will get you about 500 square metres in Bondi, approx 20min from the city.

I have no idea of the areas in London and Brooklyn, they could be a posh as becks or as rough as guts as far as I know... I would be interested in finding out how Sydney compares from an objective point of view. Perhaps some of the high prices are justified considering the amount of land you get in comparison with distance to a major hub? Perhaps no?

 

[CamKawa]

Sorry but that is all a load of rubbish. People on average incomes have ALWAYS had to make sacrifices to attain a home, car, raise family etc. I've never heard of ANYONE saying it has been easy......

The problem with the "youth of today" is that they all think that it should come easy, but it never has.

Cheers,

Beej

lol

 

[Beej]

Easy to say things from the armchair but that is not where one learns reality.

Remember the old term, "we are all born equal, it is just that some are born more equal than others"

IMVHO of copurse.

Sorry, but my comments & views are not "from the armchair" - I've bought and sold several properties etc since the early 90s as well as been involved in various other business enterprises etc. My parents also bought houses in 60s etc and I know what it was like for them - no different to now!

In terms of equality within society, again, that has ALWAYS been a problem, and probably always will be. At least today the middle class is broader and has more real income and wealth than at any other time in Australia's history (in real terms), which goes some way towards ensuring opportunity is provided to the maximum number of people.

Cheers,

Beej

 

[Temjin]

Sorry but that is all a load of rubbish. People on average incomes have ALWAYS had to make sacrifices to attain a home, car, raise family etc. I've never heard of ANYONE saying it has been easy......

The problem with the "youth of today" is that they all think that it should come easy, but it never has.

Cheers,

Beej

Sorry, but I think that is a load of rubbish as well.

Again, I'm going back to the recency bias. Do you even understand it?

Just because it is the NORM right now for an average person to sacrifice alot of things in order to buy an average size home, it does not automatically mean that it HAS ALWAYS been the same in the past, or will be so in the future. I am not saying that in any point of time in history, there is no need to make any sacrifice in order to buy a home, however, I am more sadden by some of my friends who have totally extended themselve, both financially and emotionally, just to "mortgage" a house in order to avoid being "left out".

Let me correct your phase.

The problem with "youth of today" is that they NEVER attempt to study and understand the history. Therefore, they have made decisions that are based on only what they see RIGHT NOW and will believe in without hestiation that the future will be what they see as reality today.

Sacrifice, what a word. It's just a word. Is doing without some unnecessary items to have a home a sacrifice. Is settling for a modest home that you can afford a sacrifice because you can't afford a Mansion. Is not trying to keep up with the Joneses a sacrifice?. Your parents, if they were like me, saved hard to get at least a sizeable deposit before they owned a car or a house. I suggest they lived within their means, did without a lot of "things" they would have liked and did not consider it a sacrifice.

Perhaps you have made a biased judgement on me that I am one of those typical bloke who think he should have a $100,000 graduate job and should easily afford a Mansion first year in their job.

I understand what is sacrifice, but I am wise enough to know if certain things are WORTH sacrificing now. No one can assume what the future will hold.

However, the fact that we have had such a run of propersity over the last decade largely thanks to the credit boom, I believe it is totally unreasonable to assume the future will be the same. House prices have way over-extended themselves and no sensible person with a solid understanding of history would think it is worth sacrificing AS MUCH AS YOU CAN right now just to get into the property market.

 

[pepperoni]

Sydney property .. a mess of international news proportions!

Seeing some good $2m-$3m sales around mosman ... 5kms down the road (even on the beaches) its a bloodbath.

http://www.iht.com/articles/2008/08/20/business/ozecon.php?page=1

 

[explod]

hello,

blah blah blah, same old same old

thankyou
robots

Hello

Without qualification what you are saying is nothing. At least rubbish is something.

The financial dynamics have changed and apart from those needing to buy a home in which to live, it is a new ball game.

Thank you (bow scrape and lick)
Explod

 

[robots]

Hello

Without qualification what you are saying is nothing. At least rubbish is something.

The financial dynamics have changed and apart from those needing to buy a home in which to live, it is a new ball game.

Thank you (bow scrape and lick)
Explod

hello,

thats right, and with around 70% of property housing OO's that indicates a reasonable proportion of the community is in with property,

specciefestors only 30%, not much is it,

are margin loaners specciefestors? or the good guys what about CFD people using "huge" leverage?

thankyou
robots

 

[trading_rookie]

Gotta agree with the sacrifice sentiment at least for the property market in the non-mining boom states.

The financial dynamics have changed and apart from those needing to buy a home in which to live, it is a new ball game.

How so? In the 90's when I as a Gen-Xer got my first mortgage, guess what I had to pay stamp duty. It was a considerable amount. Let's say a house
bought today is worth 3 times more than what I paid for mine, yet the duty is half now than what I paid And if it's your first home you pay
nothing!

The interest rate I had to pay was a lot higher than it is today. I was on crap money but 'sacrifice' and finding something affordable not where I'd love to live where the key. So too paying fortnightly instead of monthly, that means hardly eating out, video's instead of the cinema's and drinking at home with company instead of splashing out $100-$200 in the city. If this doesn't sound
like you then rent....property investors will be glad that you did? ;-)

It seems ppl have always moaned about the price of property. Wish I'd recall their name, but while watching a repeat of Countdown on Rage there was a group in Oz, in the early 80's named after the expensive cost of property and 'crisis' at that time.

 

[explod]

To both previous posters. In short as an investor there are better investments than property at the moment. In the last five years I have brought and sold 10 properties, at one stage having 4 on the books at the one time. I merely say that the trends I follow at the moment provide much greater growth and yield than property.

But dont' worry there will be a time to go back to property for me but that time is not now by a long chalk.

 

[robots]

hello,

ok great effort explod, so lets put away all the rubbish associated with property

i think property is a good investment and will continue to go with the flow, currently have 2, cannot see anything on the horizon that will bet it

thankyou
robots

 

[gfresh]

No attack trading_rookie - but what was your wage at the time, and how much were your weekly payments at the time? The proportions at least anyhow. They're the key indicators of how much sacrifice people at the time were making.

At the moment a $400k loan will cost you $812/wk in mortgage repayments. To service that at the "affordable" 30% of weekly earnings, the couple needs to be earning $2700/wk, or ~$140400/year NET (after tax is deducted), or approximately $100k EACH gross.

For a $300k loan (the bare limits of a unit these days in most places) it's $610/wk, or ~$2000/wk clear for a couple, or approx $104k NET, or $70k each gross.

Maybe the 30% "affordability" measure is a stupid one, but how many people are earning that sort of money below 25 years old? Most are still at uni until 23-24 these days. Even more so, even at 30 years old those incomes are quite generous for the large majority of people out there.

People can still own property if they really work hard enough for it, but it's certainly not easy. Never mind if you want to have children or anything such as this.

Even 2 years ago the property environment was a very different one to the one that exists today. 20% gains, which have occurred in some areas on say a $350k property is a very big increase at the end of the day. More so in the repayments which rise significantly for every extra $10k borrowed (e.g. $300k = $610, $330 = $670/wk).

 

[wayneL]

I think property is a good investment...

It is... at the right price.

BTW, the development where I am living - the design I'm renting (a three story three bedroom townhouse) was being sold for £315,000 when we arrived here, now being advertised for £232,995.

...and nobody wants them at that price even.

 

[Beej]

It is... at the right price.

BTW, the development where I am living - the design I'm renting (a three story three bedroom townhouse) was being sold for £315,000 when we arrived here, now being advertised for £232,995.

...and nobody wants them at that price even.

Interesting! How much rent do you pay?? (If you don't mind revealing??)?

PS: to gfresh - re the "30% mortgage stress threshold thing" - I think that it is meant to be 30% of *gross* earnings, not net. Even so, I personally have been above that many times in the past, and don't consider that stressed at all! In those times I used to party hard, going out all the time, womanising etc I traveled o/s many times and did all that on spare cash after paying mortgages etc. Maybe easier when single rather than married/kids etc (as is my case now! but with no mortgage of course....), but still.....

Cheers,

Beej

 

[wayneL]

Interesting! How much rent do you pay?? (If you don't mind revealing??)?

PS: to gfresh - re the "30% mortgage stress threshold thing" - I think that it is meant to be 30% of *gross* earnings, not net. Even so, I personally have been above that many times in the past, and don't consider that stressed at all! In those times I used to party hard, going out all the time, womanising etc I traveled o/s many times and did all that on spare cash after paying mortgages etc. Maybe easier when single rather than married/kids etc (as is my case now! but with no mortgage of course....), but still.....

Cheers,

Beej

£775 PCM

And bear in mind that yields here in the UK are traditionally quite high; usually around 8-11% depending on the point in the cycle (that was before this bubble of course).

I have a couple of IPs (substantial 4 bed detached) in the next county I bought some years ago at a whisker under 9% gross yield.

(and the tenant pays the council tax )

*****

Here's an interesting chart from which to draw your own conclusions:

 

[xoa]

Bad news for speculators. Good news for everybody else.

Vacancy rates are also soaring.


***
Boon for buyers as house prices tumble
Article from: Sunday Herald Sun
Tony Rindfleisch
August 24, 2008 12:00am

HOUSE values are bleeding up to $7500 a week as a downturn in the property market hits home.

Top-end properties are selling for $200,000 less than they achieved late last year, while the average $400,000 home has lost about $40,000.

Falling prices have hit every part of Victoria, with even prestigious suburbs suffering price cuts of up to 10 per cent in the past 12 months.

Agents said "poor quality" houses in outer suburbs could be worth up to 20 per cent less than similar homes last year.

Signs have been pointing to a buyers' market and an interest rate cut next month would swing conditions in their favour. An expected rise in homes for sale in spring has some experts worried prices will not pick up soon.

[...]

http://www.news.com.au/heraldsun/story/0,21985,24230242-2862,00.html

 

[robots]

hello,

oh yes, the us vs. them

thanks for supporting the ultimate reason,

got any evidence from the SRO, otherwise it means diddly squat

thankyou
robots

 

[gfresh]

Plenty of anecdotal evidence out there, depending on the area..

Woman at work just bought a place for $370k in an estate type area on the north GC. On the market 6 months ago for $450k. That's a whopping 17% haircut as desparate sellers. Great deal really for a newish 4br house.

People are still buying, no doubt there, and will continue to buy probably until the recession kicks in -- but they won't be chasing higher and higher prices for a while, fighting amongst buyers in every single suburb like the old days.