House prices to keep falling for years

[robots]

Why do you need 'mortgage assistance'. I thought it's paradise where you are.

hello,

what do renters need rent assistance for? i thought they on the money with like not being on board the ponzi scheme and being gun traders

confusing isnt it, another rough ruling for the people doing the most work in the community

thankyou
robots

 

[Dowdy]

I feel sorry for all the first home owners who get duped into buying because of the government grant.

 

[prawn_86]

hello,

what do renters need rent assistance for? i thought they on the money with like not being on board the ponzi scheme and being gun traders

confusing isnt it, another rough ruling for the people doing the most work in the community

thankyou
robots

I know your being deliberately provocative Robots, but rent assistance is only provided to those with a low income (IE those already recieving centrelink). It's there because no one could live off of the amount that you get without rent assistance.

 

[Beej]

Not surprising at all. This quarter's falls will be even greater. The thing that many of these propvestors have forgotten is that that trend has well and truly changed, and the property market moves in one direction for years (hence the title of this thread). 10%+ per annum falls over the next several years is a given.

How do you know this quarters falls will be greater, when in the major market (Sydney) the falls decelerated compared to the past 2 quarters? What about those cities where prices actually grew? How do they fit in with your hypothesis?

Re 10% pa falls for years - I don't think so. Hasn't been the trend at all during past downturns. What's the LONG term trend for property? Up and only up! Down trends are only a blip. In past recessions you see a maybe a year with some slow falls (national or regional trend) followed by a soft/flat market for a couple of years rather than ongoing falls. Of course the higher they rose the harder they can fall, so those regions that had incredibly strong growth through 2006/2007 will be hit harder than Sydney for example, which has been pretty stable since 2004 over-all.

Even in the current Sydney market many sub-area's have seen decent price growth during the last quarter (as shown in stats I posted in the other thread).

That's still my view anyway - it's supported by a range of stats/data so overly aggressive bears please don't attack me for having an opinion that differs to yours!

Spot on.............while unemployment figures increase (+250,000), pressure is on current home owners and property prices and throws increasing caution on first home buyers......the fall will continue until data turns positive in the US or China.

Yes but these factors are offset by supply side issues, growing population, government support/grants and historically low interest rates plus rising rents. You are right though in that there will be little growth and certainly no boom until after the US and China worms turn again....

I feel sorry for all the first home owners who get duped into buying because of the government grant.

Why do you feel sorry for them? If they are happy because the have a house they can afford for themselves and their family to live in with security and stability, and it's costing about the same as it was costing to rent, and they paid zero stamp duty and got $14k-$21k from the government to subsidise their purchase, what have they got to lose? I think in the long run they will be the ones who end up feeling sorry for those who want to but choose not to buy - those who end up waiting too long, missing the market turning up and again (eventually), who keep waiting for the "big" falls that never come, and in the meantime have sunk so much $$$ into rent and possibly had the hassle and expense of having to move their families multiple times etc etc. Whatever happened to house prices, I would not give up at least owning my own home for anything!

Cheers,

Beej

 

[robots]

hello,

no i am not, i am telling you as it is

rent assistance is also available to people not on welfare

people who live in areas they shouldnt, people who spend up everything and then get down to the assistance centre's

professional's

thankyou
robots

 

[dhukka]

Well very interesting! My notes and observations:

1) National y/y Dec 07 -> Dec 08 fall = -3.3%.

2) Sydney, the largest market in AU and typically the leading indicator for other markets, was basically flat (-0.3%) in Q4, after the previous 2 quarters of larger negative moves. This data supports my previously stated (anecdotal evidence based) view that in Sydney prices pretty much stabilised at the end of last year due mainly to lowering interest rates and the FHB grant boost.

3) Perth is not down for the quarter anywhere near as much as everyone expected - why is that? Any Perth people got an explanation for that one?

4) Despite all the economic doom and gloom, the international situation etc etc, 3 cities still managed to put in a median PRICE INCREASE for the last quarter (Adelaide, Darwin and Canberra). Additionally, Adelaide and Darwin are both still in positive y/y territory (+2.0% and +3.8% respectively).

With interest rates continuing to fall plus the delayed impact of the cuts already in play, the FHB grant boost in full swing, and the effect of increased FHB numbers starting to flow through to sales volumes at higher rungs on the ladder in the first half of this year, normally I would say we were set up for a strong market and price rises. However, these factors will be offset by rising unemployment and lower job security with a corresponding lack of confidence to buy for many, even if not directly impacted by those factors.

The combined effect in my view will be a continued stabalisation of the market (I'm talking Sydney in particular) on falling turn-over as a lot of people - both potential buyers and sellers - pull their heads in some more. We will see quarterly stats through the year with small negative or small positive moves. Anyone intending to buy (or sell) will need to look at the trends in their own individual suburb/area to get an accurate picture of where things would stand if you were to pull the trigger.

Am I still considered a perma-bull here because I still think it is highly unlikely (virtually impossible) that prices will fall by 40+% across the board in Australia, and Sydney in particular? A view incidentally shared by most mainstream economists and commentators. Or because I think there is some real opportunity out there at the moment for FHBs, upsizers and astute investors alike? It still seems to me there is mounting evidence that the market here is not currently, and is not going to be, impacted by the same factors that have pushed the US and the UK down over the past 12-18 months.

Cheers,

Beej

Sydney prices for Sep08 and Jun08 were both revised lower by more than 1.0%. All cities down from their respective peaks except for Darwin which is the most unreliable, even the abs doesn't put much faith in the Darwin numbers;

The series most affected by limited market scope is the Darwin established house price index. As can be seen from the data in Table 8, the series for Darwin is affected by a relatively low number of transactions in any quarter. Rather than suppress publication, the series are included here because it is believed that the long term trends are reliable. However, because of the limitations in the reliability of individual quarter-to-quarter movements, users are advised to exercise due care when analysing such movements.

As usual, you can't read too much into one quarter's worth of data. I don't expect much more than small incremental declines akin to the current quarter for the next couple of quarters. The second half of the year could get interesting as unemployment rises, the economy deteriorates and expectations are reigned in.

 

[nomore4s]

Sydney prices for Sep08 and Jun08 were both revised lower by more than 1.0%. All cities down from their respective peaks except for Darwin which is the most unreliable, even the abs doesn't put much faith in the Darwin numbers;

lol, why doesn't that surprise me.

Prices up here have come off the boil a bit but not a great deal, property up here is extremely overpriced imo.
People up here generally have thier heads in the sand regarding the economic downturn thinking Darwin will be immune due to the massive growth we have had in the past few years but money is getting harder to collect and alot of projects are being shelved, I also think the 2nd half of the year will be telling.

 

[Santoro]

hello,

no i am not, i am telling you as it is

rent assistance is also available to people not on welfare

people who live in areas they shouldnt, people who spend up everything and then get down to the assistance centre's

professional's

thankyou
robots

WRONG

Centrelink


You may be eligible for Rent Assistance if you:

- receive a pension (special rules apply if you are under 21 years and receive Disability Support Pension), or
- have dependent children and get more than the base rate of Family Tax Benefit, or
- have care of a child between 14% and 35% of the time and are not eligible for Family Tax Benefit but meet other Family Tax Benefit requirements, or
- receive an allowance or benefit (but don't have dependent children) and: are over 25 years, or
have a partner, or are under 25 and living permanently or indefinitely apart from your parents or guardians.

To receive Rent Assistance you must also meet the residence requirements of your pension, allowance, or benefit.

 

[grace]

Interesting on ABC TV News tonight Alan Kohler discussed the ranges of reporting of house drops in Australia from
0.8% to 8.6%, depending on who was quoting. Ranged from Real Estate Industry, RPData, and I can't remember the last one.

He said "lucky I can work out what shares are selling for".

 

[CamKawa]

Interesting on ABC TV News tonight Alan Kohler discussed the ranges of reporting of house drops in Australia from
0.8% to 8.6%, depending on who was quoting. Ranged from Real Estate Industry, RPData, and I can't remember the last one.

He said "lucky I can work out what shares are selling for".

That's one of the big disadvantages of property. You are forever trying to work out what your joint is worth and in a sliding market it may catch a few specuvestors out. Oops I'd realize I was down $150,000 until they actually try to sell - lol. Welcome to the joy of owning property.

 

[MR.]

With volumes down perhaps it is only the better properties selling at just below the old average prices! Would make some sense would it not? Wouldn't change the averages much!

You were going to buy a dump for 600k but then were able to buy something "finished", perhaps "new" for 600k you would be mighty happy!

How would the stats look? Just as they do?

 

[Beej]

That's one of the big disadvantages of property. You are forever trying to work out what your joint is worth and in a sliding market it may catch a few specuvestors out. Oops I'd realize I was down $150,000 until they actually try to sell - lol. Welcome to the joy of owning property.

That same "surprise" can work in the other direction as well - Ie you go to sell and get $100k over your reserve at the auction....

Property is different to shares - all shares in one company are the same - every property is different, that's why property is harder to value accurately until you actually sell. If you don't like that then don't buy property!

Cheers,

Beej

 

[stock_man]

RELATIVELY RESILIENT
The steep cuts in interest rates seemed to be offering some support to house prices as the pace of decline slowed on a quarter-to-quarter basis.
Prices dipped a smaller-than-expected 0.8 percent in the fourth quarter, compared to the third quarter when they sank 2.4 percent.
In any case, the annual losses of 3.3 percent in Australia are relatively modest compared to declines of 15 to 20 percent suffered in the United States and Britain.
This was partly thanks to still high levels of skilled migration and a rising population. There are also far fewer unsold homes in Australia, which had never gone though the huge building boom that left so much stock in the United States.
Monetary policy was having more of an impact as the main variable mortgage in Australia is benchmarked off the central bank's cash rate, unlike in the U.S. where the most popular fixed rate mortgages are tied to Treasury yields.
Rory Robertson, interest rate strategist at Macquarie, noted that the headline variable mortgage rate had fallen to around 6.85 percent, from 9.6 percent before the central bank began easing.
"Big RBA-driven mortgage rate reductions obviously have provided major support for local home prices through recent global gloom and doom," he said.
Should the central bank cut as expected on Tuesday, the mortgage rate could drop to 6.0 percent or less, near its lowest since 1970.
"House prices will come under further pressure as unemployment trends higher," Robertson added. "But mortgage rates will continue to be reduced to new generational lows, providing great support to most homebuyers." (Editing by Neil Fullick)

http://www.guardian.co.uk/business/feedarticle/8337988

 

[kincella]

I monitor 2 suburbs on a weekly basis...I look at whats for sale and the prices...all the good average houses have not been available for sale for over 6 months....a lot of new listings are the bottom of the range....thats whats been selling...to fhb....
late Nov...something changed...all the lower priced ones had been sold....a range up from the average was now selling....ie props over the 400-500 mark...
some people were up sizing...hence the higher price range.....and the fhb were picking off all the lower stock...
of course these figures will tip the scale to a lower median price....
I do not believe people have dropped their prices.....but then again there are not many million dollar houses on the market...and it is a small market that I watch...trend or not....I think it is

 

[Dowdy]

Why do you feel sorry for them? If they are happy because the have a house they can afford for themselves and their family to live in with security and stability, and it's costing about the same as it was costing to rent, and they paid zero stamp duty and got $14k-$21k from the government to subsidise their purchase, what have they got to lose? I think in the long run they will be the ones who end up feeling sorry for those who want to but choose not to buy - those who end up waiting too long, missing the market turning up and again (eventually), who keep waiting for the "big" falls that never come, and in the meantime have sunk so much $$$ into rent and possibly had the hassle and expense of having to move their families multiple times etc etc. Whatever happened to house prices, I would not give up at least owning my own home for anything!

Cheers,

Beej

Well most people who buy with the grant can't afford the house without it which means they shouldn't be buying in the first place.
The grant artificially inflates the price. You look in the first home buyers suburbs that the price has increased usually to the same percentage as the government grant.
And most of those buyers think the price can only go up.

The market hasn't even begin to lose value yet and when they really do, then the first home buyer will get hit the most.

I do believe the market will crash over the next few year. You can listen to Stephen Keen and he explains why. http://au.youtube.com/watch?v=wHJrMUa1HBQ

Please watch it and don't brush it off

 

[aleckara]

The real truth of the matter is that at this stage of the game all I see is a lot of undecided people, and a lot of opposing views. With low volume sales while the price is going down slowly it isn't as substantiated. No one in the market really knows the direction; particularly the FHB who have everything to lose by getting into nominal debt. The market to me is in a state of indecision.

Human nature will always benefit property against all other investments. Most people think property will never go down, want to own a house. That is a big resistance to prices going down, almost a cartel. If demand dies down then supply on the market follows because Australians almost act in unison to cut supply.

To be honest I think we are at a tipping point. Either the housing market will go down significantly, or up significantly depending on who wins (i.e the government vs the credit crunch). I think the government just may win at the expense of future services, and prosperity.

The saddest thing about our country is that all we have got is housing and mining. Basically industries that are naturally protected as it's quite hard to move them offshore, anything that can be moved has been because we aren't a hard working country. Governments are going to prop up these businesses because to be honest it's all we got.

 

[gfresh]

Well most people who buy with the grant can't afford the house without it which means they shouldn't be buying in the first place.

Yup.. Seems like FHB'ers don't need a 10% deposit, $14k+ say cash $10k (sell the car, lots of that happening if you check carsales).. So really they've got a 3% deposit. Not really a great buffer if prices do come down and/or they lose a job.

JPM guesses house prices to fall another 10% in Melbourne this year: http://www.theage.com.au/national/melbourne-leads-house-price-tumble-20090202-7vrt.html

 

[Beej]

Please watch it and don't brush it off

Prof Keen is well known here and his views have been discussed several times. I do not accept his analysis and think he is wrong, (as do many respected economists). He in fact has a bet with another economist whereby if his views on house prices prove wrong he has to walk from Sydney to the top of Mt Kosciusko wearing a T-Shirt stating "I was hopelessly wrong about house prices - ask me how!". I reckon we will be seeing that event take place in a couple of years....

Cheers,

Beej

 

[kincella]

plenty of affordable houses out there now....and the price should rise by about 2500...thats how much the govt is spending on insulating houses....
for free to the owners......unfortunately my houses are already insulated...so I miss out on govt handouts again...

does this sound like some of our bears on here....is this the real story, why they wish house prices would come down ????
taken from a blog today...ref below
.....................................................................................
Hired Goon
February 03, 2009 10:11 AM I wish the RBA would stop cutting rates. They should let the housing market crash. Australia needs a good recession to teach the specufestors a lesson for destroying this country by gambling on shelter. These rate cuts will keep the bubble inflated. I hate the RBA. I want to buy a house in Adelaide but the prices keep going up and up. Now I can't afford anything. I stupidly invested all my money in commodities and energy stocks that crashed big time, if my wife finds out I've blown my money on worthless shares instead of buying a house, she will kill me! I keep telling my wife that I won't buy a house for us and our little baby because the house prices are going to crash. They have to crash sometime. Please? You are not helping RBA. Please let houses crash so I can buy a house for a reasonable price. I hate the RBA and the Somersoft specufesting house gamblers. It's just not fair! They are ruining it for hardworking people like me.
........................................................................................................
http://blogs.smh.com.au/business/2009/02/03/yoursaytherb.html?page=fullpage#comments

 

[pilots]

plenty of affordable houses out there now....and the price should rise by about 2500...thats how much the govt is spending on insulating houses....
for free to the owners......unfortunately my houses are already insulated...so I miss out on govt handouts again...

does this sound like some of our bears on here....is this the real story, why they wish house prices would come down ????
taken from a blog today...ref below
.....................................................................................
Hired Goon
February 03, 2009 10:11 AM I wish the RBA would stop cutting rates. They should let the housing market crash. Australia needs a good recession to teach the specufestors a lesson for destroying this country by gambling on shelter. These rate cuts will keep the bubble inflated. I hate the RBA. I want to buy a house in Adelaide but the prices keep going up and up. Now I can't afford anything. I stupidly invested all my money in commodities and energy stocks that crashed big time, if my wife finds out I've blown my money on worthless shares instead of buying a house, she will kill me! I keep telling my wife that I won't buy a house for us and our little baby because the house prices are going to crash. They have to crash sometime. Please? You are not helping RBA. Please let houses crash so I can buy a house for a reasonable price. I hate the RBA and the Somersoft specufesting house gamblers. It's just not fair! They are ruining it for hardworking people like me.
........................................................................................................
http://blogs.smh.com.au/business/2009/02/03/yoursaytherb.html?page=fullpage#comments

Hired Goon will NEVER own a house.