Beej, I'm afraid 25 years of experience is not nearly enough for a once in a lifetime economic downturn. I honestly hope, for your sake, that you are not relying on just your experience.
Unfortunately I disagree on this point.
Australia needs to generate 4% of GDP per annum to simply maintain its current household debt levels. I mentioned this as one of several points which required addressing by the housing bulls in the "rising for years" thread but none bothered to reply.
Inflating $40bn (4% of GDP, coincidence I think not) through debt creation and pumping it into the economy is a shell game. Especially when you consider it only moves money from household debt and adds to the percentile required to maintain our net foreign debt levels.
2. Australian household debt is 177% of GDP and this ratio is climbing fast as Australian manufacturing index declines for the 8th straight month. This is almost a world record level of debt:GDP ratio, and is simply unsustainable. Take a look at Japan for this week to get an idea of what happens when you go crazy on debt:GDP.
3. Another debt ratio closely related to point 1, net foreign liabilities (the majority of our net foreign liabilities are in real estate) is standing at roughly 60% of GDP (and rocketing upwards). As a country, we will have to generate 4% of GDP to continue our liabilities, twice the current required payment of the US.
One thing I know is that during every recession I can recall - 80s, 90s, even dot com crash, was at the time touted as a "once in a lifetime/worse since great depression" downturn. I'm told by my dad that the same things were said during the early 70s oil shock and resulting downturn. So I guess I tend to take such extreme categorizations with a big grain of salt, and instead observe what is happening for myself.....
Beej, I seriously think this is the big one, a friend of mine with "good" contacts has been saying for years that the US is a time bomb, well it's gone off.
And no matter what anyone says if the US goes heaven help us.
Agreed Burns, this is the big one, but don't tell anyone as we will end up getting 50-80% off house prices if you just be quiet.
hotbmw....not a chance...and I am talking about inner city homes and units...
prop I was looking at for someone....battler in regional town....probably worth 80 now listed at 95.....should been 120,000 before this mess....but there's a big drought out there and water is a worry....so its already down 30%....
if I had excess cash I would help out the battler....I think its a steal
other suburbs I watch...all the cheap places are gone...and they sold at a premium to what they were worth in an ordinary market.....
there is plenty of affordable stuff out there now.....its just not the prime real estate in the popular suburbs, or inner city
I wonder if you watch a particular suburb you are interested in ,,,on a regular say weekly basis ??? to check whats on the market, and the selling prices...
or are you just one of the many that believe all houses in every suburb will fall 30% ???
and do you have a deposit saved....are you intending to buy this year....or just hoping prices will crash anyway?
I am not being sarcastic...just asking a sensible question..
/puke
Dont worry Shadow your house along with a handful of your permabull mates will continue to rise faster than any other asset class ......
But prices continue to fall virtually everywhere else ...
Congrats on your money tree ....
hotbmw...sounds more like it..but you did say 10-15 and 30 not impossible....
I dont care about the top end....that was all the bankers and financial, brokers etc....that will lose their jobs and the fancy houses....
and WA and QLD can also fall...due to the high wages of the miners..that are now dissapearing...but their prices were way over the top anyway...above syd and melb....
they are expecting 300,000 to lose jobs....but some are already keeping jobs..but with less hours and less money....
there will be competition for those mid range houses....from the cashed up people,,now with low interest rates....they upgrade their houses in times like this...and the fhb buy the lower end
people like me see it as an opportunity ...prices have already come down...and rates too....
all the self funded retirees not happy with term deposit rates or the stock market....the oldies like the bricks and mortar and have the cash....not dependent on having a job or a deposit....
just need some to think from another side....not just their own position, regarding income and jobs to fund a home....
and if you think that we follow the us and uk...you may be wrong...some of us believe they follow us in housing...or we lead not follow...
think of other possibilities and affects to get the big picture....
if you seek you shall find....there will always be an opportunity to find what you want at the right price.....
don't expect this to be the case in a few months time ~ shouldn't be too long before Krudd slashes immigration once unemployment starts risingFundamentals of the Australian property market...
- Record population growth driven by strong overseas immigration and natural population increase (mini baby boom in progress!).
didn't you say there a baby boom going on? I'm pretty sure the bubs won't be buying houses by themselves and am also pretty sure most bubs are planned for prior to the conception. With the last few years of price rises (purchase and rental) expect this trend to reverse... look how many bunk beds robots has been buying!!!- Trend towards fewer persons per household is also increasing demand for new housing.
where? as far as I know, the vast majority of people in Australia have a roof over their head whether renting or owner occupier. Just have a look at the rental vacancies and for sales on RE dot com- Massive pent-up/underlying/latent demand for housing. This is becoming entrenched in many cities.
see above- Huge shortage of housing - we are simply not building enough houses for the growing population.
why are you comparing apples with oranges????- Australian median prices still very low compared to many other countries (no not the countries in the Demographia survey that only compares Australia with five other countries).
a demographic shift from renting to owning cannot be good inverstors... less renters = lower prices, and Krudd wants to build more!- Rapidly rising rents are driving investors back to property, and making buying more attractive than renting for FHBs. It is cheaper to buy than rent now in many places.
Whoops... what will happen if there are no vacancies anywhere in Australia? The doors will close and the economy will stall so I can only see vacancy rates improving in the future. That certainly won't be a factor in driving house prices up.- Record low vacancy rates. Vacancy rates in Australia are at critical levels of around 1-2% in most cities (compare this with the 10% rental vacancy rate in the USA).
yup.... so? That is a statement, not a reason...- Interest rates are falling and have a lot of scope to fall further (compared to other countries). Most IPs are now cashflow neutral or positive.
as far as I know, $1 still only buys $1... apples and oranges again. Foreign investors are not a fulcrum that the market swings on...- The falling Australian dollar has made Australian property almost 40% more affordable for many foreign investors (hey, Steve Keen's 40% crash already happened!).
yup - less renters on the market driving rents down- The First Home Owners Grant has been doubled and tripled, further encouraging FHBs to buy..
could be plausible but with the doom and gloom in the economy I doubt it. Stocks have been going down for over a year now so how can you explain the increasing number of properties on the market and the lack of interest from buyers???- The disastrous stock market is driving investors back into the security of bricks and mortar.
and 20% deposit also on the way too I believe- Prediction: Banks will start to promote Shared Equity Mortgages, 40-year Mortgages and Generational Mortgages
you appear to assume that the stock market is never going to recover... under your outlined scenario, what happens when global economies start recovering and money starts coming out the property market???- Prediction: Super Funds will start investing more heavily into property, in preference to the more volatile and risky share market.
don't know the Sydney market as well as Brissy so can't really comment...Fundamental reasons why Sydney will the next city to boom...
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