House prices to keep falling for years

[numbercruncher]

Work 1 hour or more per week and your " employed " - nation of high rollers we are

 

[BillyIdol]

Maybe you need to get a dose of reality and look in places you can afford.

Toorak is obviously not the place.

I cant afford a Maybach, but it doesn't stop me buying a Commodore.

hey, go easy now please ! Why so harsh straight away ?

My point (although extrapolated somewhat) was that from the NATSEM report, the median house was considered 'unaffordable'. I ask myself, if it is, how can prices increase ? A second question is that if it is so affordable, why are we seeing increases in FHOGs, shared equity loans etc. ? Surely, if we had an asset market 'at fair value', we would not need anyone to help buyers.

O.K., I might need to go a little lower in my expectations, but in relative and fairly clinical terms, the house 'the next rung down' probably does not represent fair value for what it is if the median price is so high (unaffordable). I would be stretching to make it this far.

Although people may not want to lose money on their house / IPs (which is understandable) that they are potentially going to sell to a first homebuyer, if there is no market for it, something has to 'give' to 'meet the market' for a transaction to occur. As tough as it sounds, it's reality - the FP in the seminar was basically saying that house prices can't possibly fall, essentially because "the will of the people who already own them is that they don't want them to", not because people who want to buy them, can't.

King Canute didn't do too well with that one.

 

[Julia]

http://business.smh.com.au/business/surprise-jobs-jump-20090212-85cg.html

Good to see the unemployment rate increase today. A bit hard to repay a mortgage or pay your rent without a job I would have thought.

Source: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6202.0Main+Features1Jan%202009?OpenDocument

A)

B) There was actually a "surprise" increase in full time jobs, with losses coming from part time, so actually more income around than previous month (if we want to be pedantic about it).

Sadly, this increase is not correct - a glitch from the ABS, suggested by Stephen Long from ABC Radio as being due to staffing cutbacks in the ABS due to the government's cost cutting. Story from "PM" here:

http://www.abc.net.au/pm/content/2008/s2490008.htm

Let's hope not too much government policy is being determined on the basis of incorrect figures from the ABS!
Sigh.

 

[singlefished]

Sadly, this increase is not correct - a glitch from the ABS, suggested by Stephen Long from ABC Radio as being due to staffing cutbacks in the ABS due to the government's cost cutting. Story from "PM" here:

http://www.abc.net.au/pm/content/2008/s2490008.htm

Let's hope not too much government policy is being determined on the basis of incorrect figures from the ABS!
Sigh.

Alan Kohler pointed this out on the news earlier this evening and according to the stats the economy could have lost upto 59,600 jobs or gained upto 62,000 jobs.... it sort of renders some of the rhetoric we hear from the spin doctors on this forum completely irrelevant (if we want to be pedantic about it).

I'm betting Krudd is now wishing Lindsay Tanner wasn't so brutal with the razor gangs last year... it would be nice to have a bit more confidence in the official ABS figures...

 

[wayneL]

"Damned lies and statistics" etc.

ABS = Absolute Bull S##t

Nobody should ever ever ever EVER trust gu'mint stats.

 

[numbercruncher]

The unemployment rate jumped by over 12pc in a single month here in sunny QLD, and its just the beginning - we might have to start turning southerners back at the border eh ?

Figures released by the Australian Bureau of Statistics on Thursday showed the jobless rate rose to 4.4 per cent in January from December's 3.9 per cent - the highest rise of any state.

http://news.ninemsn.com.au/article.aspx?id=751423


The property permabull fraternity will probably now argue that the ABS has been infiltrated by QLD realestate bears/realists and other disinformation specialists ?

 

[numbercruncher]

Our American brothers keep giving us sneek previews of our possible future ....

NEW YORK (CNNMoney.com) -- Home prices fell 12.4% during the fourth quarter of 2008, the largest year-over-year decline since the National Association of Realtors began keeping comprehensive records in 1979.

http://money.cnn.com/2009/02/12/real_estate/Latest_median_prices/index.htm

Cape Coral-Ft. Myers, Fla., which has the third highest rate of foreclosure filings in the nation, according to RealtyTrac, prices fell a devastating 50.8% for the year, to $110,900 from $225,300. That was the most precipitous plunge for any metro area.

Didnt one of the one eyed permabulls say 50pc was impossible anywhere ? and in a short year , wow ..... I bet many of our bubbly mining towns face this as a minimum ..... 190 a week dole wont service 600k mortgages on old white ant ridden Qlder's I heard .....

 

[Aussiejeff]

The unemployment rate jumped by over 12pc in a single month here in sunny QLD, and its just the beginning - we might have to start turning southerners back at the border eh ?



http://news.ninemsn.com.au/article.aspx?id=751423


The property permabull fraternity will probably now argue that the ABS has been infiltrated by QLD realestate bears/realists and other disinformation specialists ?

Not to worry. The Absolute Bull Shyte department will simply rig the figures next month to show a "surprise" 50% leap in QLD full-time jobs.

Should we expect less from loyal gummint plodders? I wonder if KRudd has promised 'em "surprise" secret bonuses if they can "make the figures look much better"?

 

[Aussiejeff]

Our American brothers keep giving us sneek previews of our possible future ....




http://money.cnn.com/2009/02/12/real_estate/Latest_median_prices/index.htm



Didnt one of the one eyed permabulls say 50pc was impossible anywhere ? and in a short year , wow ..... I bet many of our bubbly mining towns face this as a minimum ..... 190 a week dole wont service 600k mortgages on old white ant ridden Qlder's I heard .....

Not to worry.

The plucky Yank Shock Market rebounded a Zillion points in the last few minutes of trading on SPECULATION from an UN-NAMED source that the Obama-ites will "help mortgagees".

http://www.news.com.au/heraldsun/story/0,21985,25048292-5005961,00.html

See?

All the World really needs to prosper is SPECULATION, RUMOURS and INUENDO.

"And the red red Robin keeps bob, bob, bobbin' along, along...." :bananasmi

 

[Glen48]

The Kiwi's do have a clue about housing like we do:
[NZ HOUSE PRICES] REINZ's latest housing rpt painted a grim picture of NZ's housing market; with sales of NZ houses turning to plunge by 13.9% over Jan to a 17yr low of 3,706 houses following a 0.5% gain prior. The dismal result amounted to sales being down a hefty 28.5% on the year.

 

[gfresh]

Bring it on QLD Although can't see I'm seeing too many signs of distressed sales at the moment, although a few seem sus.. If that changes in the next 6 months, going to be an interesting scenario. Can't really be put to auction now can they, with 20% or less auction clearance. Also, supposedly now it's illegal in QLD for the bank to sell the property "below market value".

 

[professor_frink]

Bring it on QLD Although can't see I'm seeing too many signs of distressed sales.. If that changes in the next 6 months, going to be an interesting scenario. Can't really be put to auction now can they, with 20% or less auction clearance. Also, supposedly now it's illegal in QLD for the bank to sell the property "below market value".

dunno what the actual law is on that in NSW, but did go to a couple of mortgagee auctions in the 2nd half of 07 when I was looking for a house. Both times the bank involved expected a "market" price for the house being sold. On one house I was thinking of putting a bid in for, but was put off by the amount of people that went through it prior to auction. Knew it needed a lot of work, and with the amount of people going through it thought my chances of picking it up for a fair price were pretty slim. Turned out that the reserve put on it by the bank was 60K above what I would have been happy to pay(this is on a sub 300K house) The house ended up going above the reserve by 1K, and only after lengthy negotiations between the agent and the highest bidder.

Will be interesting to see how the banks start behaving in these types of situations if the sh!te really does hit the fan, you wouldn't think they would want large numbers of empty houses on their books doing nothing when they can't sell them for what they deem to be a "market' price

 

[singlefished]

dunno what the actual law is on that in NSW, but did go to a couple of mortgagee auctions in the 2nd half of 07 when I was looking for a house. Both times the bank involved expected a "market" price for the house being sold. On one house I was thinking of putting a bid in for, but was put off by the amount of people that went through it prior to auction. Knew it needed a lot of work, and with the amount of people going through it thought my chances of picking it up for a fair price were pretty slim. Turned out that the reserve put on it by the bank was 60K above what I would have been happy to pay(this is on a sub 300K house) The house ended up going above the reserve by 1K, and only after lengthy negotiations between the agent and the highest bidder.

Will be interesting to see how the banks start behaving in these types of situations if the sh!te really does hit the fan, you wouldn't think they would want large numbers of empty houses on their books doing nothing when they can't sell them for what they deem to be a "market' price

better to preempt the spin doctors response that the high participation rate, property selling above reserve and massive turn out at auction (especially at the lower FHB end of the market) is the sign of a healthy market. This info pertains to market activity back in 2007, some 5 or 6 quaters ago and is not reflective of current conditions / sentiment / et al....

 

[professor_frink]

better to preempt the spin doctors response that the high participation rate, property selling above reserve and massive turn out at auction (especially at the lower FHB end of the market) is the sign of a healthy market. This info pertains to market activity back in 2007, some 5 or 6 quaters ago and is not reflective of current conditions / sentiment / et al....

The high interest in it prior to auction had nothing to do with the market being in a good state(it hasn't been in a "good" state here since early 2004), it was more like a pack of vultures that had found a corpse to feed on. Most of the interest was killed off when the auctioneer knocked back the opening bid of 200K and pushed for the bidding to start at 250. Out of a crowd of roughly 70-80 people, only 3 even bothered to bid, and one of them wouldn't go over 260!

 

[investorpaul]

At the moment the property market is being propped up by first home buyers, this is occurring for a number of reasons:

1. The first Home Buyer grant being increased.
2. Record Low Interest rates and most importantly
3. Most first home buyers would be too young to remember a full blown recession in this country, they dont realise how bad it will/could get and therefore jump into property because of the above two reasons.

The question needs to be asked though, what will happen once the first home buyer grant reverts to normal levels? and secondly once these young first home buyers realise how bad a recession can be will they still be willing to jump into property?

The answer to the first question is obvious, once the FHB grant goes, interest in the first home buyer market drops off. As a side note the month before the end of the grant will probably involve some "frenzied" buying by First home buyers before the grant is removed.

The second question is a bit more indepth; Once unemployment kicks up and these younger peoples notice some of their peers losing their jobs they will take a more cautious approach the net result being a reduction in first home buyers.

Both of the above conditions will drive house prices down, how much will depend on the extend to which the RBA cuts rates, but the direction will be down.

 

[MrBurns]

At the moment the property market is being propped up by first home buyers, this is occurring for a number of reasons:

1. The first Home Buyer grant being increased.
2. Record Low Interest rates and most importantly
3. Most first home buyers would be too young to remember a full blown recession in this country, they dont realise how bad it will/could get and therefore jump into property because of the above two reasons.

The question needs to be asked though, what will happen once the first home buyer grant reverts to normal levels? and secondly once these young first home buyers realise how bad a recession can be will they still be willing to jump into property?

The answer to the first question is obvious, once the FHB grant goes, interest in the first home buyer market drops off. As a side note the month before the end of the grant will probably involve some "frenzied" buying by First home buyers before the grant is removed.

The second question is a bit more indepth; Once unemployment kicks up and these younger peoples notice some of their peers losing their jobs they will take a more cautious approach the net result being a reduction in first home buyers.

Both of the above conditions will drive house prices down, how much will depend on the extend to which the RBA cuts rates, but the direction will be down.

KRudd wil keep the grant going til we're broke and the housing bubble is out of control, also interest rates will be zero just to keep it all going and send savers broke.
KRudd has got a plan for everybody.

It will all come down eventually, I dont believe KRudd can defy gravity forever.

 

[investorpaul]

KRudd wil keep the grant going til we're broke and the housing bubble is out of control, also interest rates will be zero just to keep it all going and send savers broke.
KRudd has got a plan for everybody.

The bigger the bubble the worst the burst and Ill be waiting at the bottom for a bargain.

 

[MrBurns]

The bigger the bubble the worst the burst and Ill be waiting at the bottom for a bargain.

About 2 years will be the bottom so I'm told.
A long time to wait.

 

[investorpaul]

About 2 years will be the bottom so I'm told.
A long time to wait.

I hope it is about 24-30 months to be honest.

At the moment i am concentrating on my Stocks & CFD trading.

In 12 months I get married and we already have accommodation (inlaws flat) which we can we for as long as we want, but Ideally I only want to be there 12-18 months. So during that time the plan is to save like crazy.

 

[MrBurns]

I hope it is about 24-30 months to be honest.

At the moment i am concentrating on my Stocks & CFD trading.

In 12 months I get married and we already have accommodation (inlaws flat) which we can we for as long as we want, but Ideally I only want to be there 12-18 months. So during that time the plan is to save like crazy.

Just watch the market with interest rates so low anything can happen although I still wouldnt jump in if the market spikes I still think it will tank but that process will be distorted by the grants and low rates.

Your time frame is about perfect.