House prices to keep falling for years
- Thread starter Pommiegranite
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Here's an interesting graph
Looks at the bust phase in housing price cycles surrounding banking crises, including the current episode in the US and a number of other countries now experiencing banking crises.
Notably, the duration of housing price declines is quite long-lived, averaging roughly six years. Even excluding the extraordinary experience of Japan (with its 17 consecutive years of price declines), the average remains over five years.
Look at it as a sign of things to come in Australia or you can just ignore it and keep thinking it's paradise
Looks at the bust phase in housing price cycles surrounding banking crises, including the current episode in the US and a number of other countries now experiencing banking crises.
Notably, the duration of housing price declines is quite long-lived, averaging roughly six years. Even excluding the extraordinary experience of Japan (with its 17 consecutive years of price declines), the average remains over five years.
Look at it as a sign of things to come in Australia or you can just ignore it and keep thinking it's paradise
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Dowdy - that graph was already posted and discussed at length a few days ago (see https://www.aussiestockforums.com/forums/showthread.php?p=394010#post394010 and the following discussion).
Bottom line - interesting data, but Australia is not currently suffering from a "systemic banking crisis" like the US and UK are - That bullet seems to have been dodged, and it's why their markets have crashed and ours hasn't. PHEW!
Cheers,
Beej
Bottom line - interesting data, but Australia is not currently suffering from a "systemic banking crisis" like the US and UK are - That bullet seems to have been dodged, and it's why their markets have crashed and ours hasn't. PHEW!
Cheers,
Beej
Really Beej? http://business.theage.com.au/business/bad-debts-spiral-amid-shockwave-fears-20090206-800b.html
Doesn't sound too promising to me. But then spruiking always distorts the facts hey.
You need to research the difference between a "systemic banking crisis" and an increase in loan defaults/bad debts/bad debt provisions etc due to an economic downturn (that happens all time). The two are FAR from the same thing.
I'll give you a clue - what profits did NAB and CBA just announce for example? The figures are in the very article you posted. If one (in fact it would really have to be more than one) of the big four goes under/insolvent or has to be nationalised by the government then you might have a case. Until then no cigar, no matter how hard you keep "spruiking" your property crash fantasy in the meantime!
On another note - more evidence of significantly increased FHB activity in NSW: (some interesting exerts below)
from http://www.smh.com.au/news/national...ntage-of-grants/2009/02/06/1233423496702.html
If we were in the middle of a "systemic banking crisis" then there is NO WAY all those FHBs would be able to get loans. QED. The longer approval times may be due to the banks being more cautious/careful - but equally might just be because the are so busy right now!
Beej
interesting article about how the low interest rates are attracting a lot of buyers......
and this piece, about individual homes are not necessarily lower in price...its just that they are selling a stack of lower priced homes...which affects the median values for a suburb (traps for players to be aware of)
***The current declines are due to a change in the composition of sales, and not individual houses losing value.
About half of the house sales across Brisbane during the June quarter were for less than $500,000. In the September quarter, 62percent of Brisbane sales brought less than $500,000 and Matusik's preliminary data suggests close to 70 per cent of sales in the last three months of last year were for less than $500,000.
He says the median price must fall under these circumstances
http://www.theaustralian.news.com.au/business/story/0,28124,25017182-25658,00.html
and this piece, about individual homes are not necessarily lower in price...its just that they are selling a stack of lower priced homes...which affects the median values for a suburb (traps for players to be aware of)
***The current declines are due to a change in the composition of sales, and not individual houses losing value.
About half of the house sales across Brisbane during the June quarter were for less than $500,000. In the September quarter, 62percent of Brisbane sales brought less than $500,000 and Matusik's preliminary data suggests close to 70 per cent of sales in the last three months of last year were for less than $500,000.
He says the median price must fall under these circumstances
http://www.theaustralian.news.com.au/business/story/0,28124,25017182-25658,00.html
I posted this on another site.....but the article confirms my own research in the suburbs I watch......there is a lot of activity out there
...........................................................................................
Garth Makowski, of Dougmal Real Estate at Campbelltown in Sydney's southwestern suburbs, said inquiries had nearly doubled to about 600 a month, while the time it took to sell a property had fallen from up to 100 days to as little as one week.
"That happened for us back in October. As soon as the grants came in, then bang, it just went through the roof," Mr Makowski said yesterday.
....................................
and graphs I saw yesterday showed most loans in sydneys west past 5 years were done by the brokers.....not the banks....there were stories the brokers were glossing up the applications....the people could not speak english, let alone read it...and had no jobs
http://www.theaustralian.news.com.au/business/story/0,28124,25019266-25658,00.html
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Ever met a wealthy person who complains and moans about everything ?
*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
...........................................................................................
Garth Makowski, of Dougmal Real Estate at Campbelltown in Sydney's southwestern suburbs, said inquiries had nearly doubled to about 600 a month, while the time it took to sell a property had fallen from up to 100 days to as little as one week.
"That happened for us back in October. As soon as the grants came in, then bang, it just went through the roof," Mr Makowski said yesterday.
....................................
and graphs I saw yesterday showed most loans in sydneys west past 5 years were done by the brokers.....not the banks....there were stories the brokers were glossing up the applications....the people could not speak english, let alone read it...and had no jobs
http://www.theaustralian.news.com.au/business/story/0,28124,25019266-25658,00.html
--------------------------------------------------------------------------------
.
Ever met a wealthy person who complains and moans about everything ?
*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Interesting graph gfresh - thanks for posting!
FYI - one thing that data shows, is that if you sell a cheaper house (PPOR) now, and upgrade to a more expensive one, the difference in price will be less today than it was a year ago - this is exactly why I chose to upgrade my PPOR at the end of last year in this market.
IMO those expensive suburbs will in the future rise just as strongly as they are falling right now (probably even more so), due to their desirability/exclusivity. In Sydney in particular that top 10% is some pretty desirable, special property!
Cheers,
Beej
FYI - one thing that data shows, is that if you sell a cheaper house (PPOR) now, and upgrade to a more expensive one, the difference in price will be less today than it was a year ago - this is exactly why I chose to upgrade my PPOR at the end of last year in this market.
IMO those expensive suburbs will in the future rise just as strongly as they are falling right now (probably even more so), due to their desirability/exclusivity. In Sydney in particular that top 10% is some pretty desirable, special property!
Cheers,
Beej
Well getting a loan is one thing, being able to service that loan is yet another. Good luck with your "non systemic" banking cisis. lol
Beej, do you actually think this is a good thing though?
Maybe we are setting ourselves up for some problems in the future with the Government trying to prop up the property market at all costs?
If all these FHB are now buying due to the grants and low interest rates the thing that worries me is can these people really afford to buy? What happens when interest rates rise again, if they double can these FHB afford to keep up the payments? What happens if/when higher unemployment kicks in?
With our economy only really starting to feel the effects from what is happening on a global scale I think we are in real danger of creating a larger problem for ourselves. If we continue to see unemployment rise (and we will) and then see inflation return causing rates to rise again we could start to see alot of problems imo.
The rest of the world appears to be in the middle of a massive unwinding of credit and is paying the price in a big way. Yet here we are in Aust with very high household debt levels and high debt to income ratios but are still being encouraged to spend more money and take on more debt, doing everything possible to keep the bubble inflated. Are we totally stupid?
There will come a time when we do have to repay our debt and pay for our excesses like the rest of the world is now doing, if we think this will never happen in Aust we are delusional. We could very well find ourselves in freefall while the rest of the world has bottomed out due to our refusal to take our medicine now.
As I have stated before, I think we are in a unique position here in Aust due to the fact we have seen this play out overseas before really feeling the effects here due in part to our isolation and maybe the China factor but instead of preparing for the storm we appear to think we are going to be immune because we have been so far. Our Government seems intent on wasting all its reserves early on bullsh!t measures that will last for about 2min but will keep them popular with the general voting public. I wonder how popular they will be when the **** really hits the fan and the $950 handout is long ago spent and forgotten and the well is now dry.
Rant over
lol, this maybe true but what % of the population will ever be able to own these properties? 2%? 5%?
The people that can afford these types of properties are in a postion to ride out the recession with a fair bit more easy then your general Joe blow.
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i was very bearish on property some months ago but i dont think we will be as affected as overseas. it seems govt will do all to prop things up and we wont have the price correction/fall we should of had.
2009 will be a write off and i would expect a further 5 to 15% lower from here depending on the area. so a 10% fall on average. which isnt too bad on a world scale.
Late 2009, early 2010 world economies will stabilise/recover. we will still have historically low interest rates by early 2010 and together with the better economic outlook things will turn bullish on everything & prices will start to increase on everything again.
The media will talk about how property is a bargain at current prices, we have an under supply here in oz bla bla
High Inflation in 2010+ will increase the cost of everything as it did in the 80's and 90's.
i reckon if u can buy at the end of the year and lock in a rate of 5.5% for 5 yrs your laughing by the time your fixed rate loan is up.
thoughts?
2009 will be a write off and i would expect a further 5 to 15% lower from here depending on the area. so a 10% fall on average. which isnt too bad on a world scale.
Late 2009, early 2010 world economies will stabilise/recover. we will still have historically low interest rates by early 2010 and together with the better economic outlook things will turn bullish on everything & prices will start to increase on everything again.
The media will talk about how property is a bargain at current prices, we have an under supply here in oz bla bla
High Inflation in 2010+ will increase the cost of everything as it did in the 80's and 90's.
i reckon if u can buy at the end of the year and lock in a rate of 5.5% for 5 yrs your laughing by the time your fixed rate loan is up.
thoughts?
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I was looking at buying a property at the lower end of the price scale recently, in the coastal Newcastle area.
What I found was the good cheap ones, are getting snapped up very quick.
everything else is languishing.
FBH scheme according to the agents
What I found was the good cheap ones, are getting snapped up very quick.
everything else is languishing.
FBH scheme according to the agents
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awg,
the upper and mid range is affected mostly now.
i reckon by mid year once more jobs are lost the lower end will be affected also (for the short term - 6 mths or so).
the upper and mid range is affected mostly now.
i reckon by mid year once more jobs are lost the lower end will be affected also (for the short term - 6 mths or so).
Well five seems to be a mgic number for you. How about wait five years then buy a house at 55% discount and lock in a rate of 5.5% for 5 years?
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lol
your joking right?
lock in a 5yr rate for 5.5% in 5 yrs??????????????
more like a 15% rate
inflation is coming my friend. u know what that means to interest rates and asset prices..........
Really? So why buy now? If people are struggling to service debt now imagine what it will be like in five years? The veritable je*ish fire sale.
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with all this printing of $$$$$ our salaries will be a lot higher in 6 yrs time (6 yrs cos i said to buy a home in a year & hold 5 yrs)
back in the 80's when annual incomes were lets say $4000 a year & if u bought a house for $20,000 with an $18,000 loan, with inflation at 15% what did it do to incomes and asset prices? ur debt was wiped out by inflation. ur left with wages doubling and asset prices doubling and an 18k loan.
asset prices will rise with all the actions taking place now by govts around the world.
what do others think about high inflation?
do u agree incomes rise and asset prices along with it?
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