House prices to keep falling for years
- Thread starter Pommiegranite
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so with the amount of lower end properties (typically in the FHB and IP price range) fuelling the majority of current market activity, what makes you assume that the vendor is selling to upgrade or purchase elsewhere?
it would be easy to argue that a lot of the properties coming on the market are investors getting out... trying to clear their debts in the view that their principal income may not be quite as secure as it was 6 months ago.
singlefish...of course there will be some scaredy cats..who sell at the wrong time...but the big drop in interest rates will make it easier to hold onto the property....
I met a woman once...she was not a saver nor an investor...but she got caught up in the hype in 2003/04 and bought a rental prop....she sold it within 12 months for about the same price....she had it with an agent....but she found it all too stressful...it was rented the whole time....I could not believe her reason for selling.....but some people just get too emotional ...about the wrong things
in her case, she was looking to supplement her income for retirement in 10-15 years...there was not enough in super, she had a steady job etc....but could not hack it
it takes all types....but I believe you need a bit more stamina than the rest, and to believe in the plans /goals you set for yourself
I met a woman once...she was not a saver nor an investor...but she got caught up in the hype in 2003/04 and bought a rental prop....she sold it within 12 months for about the same price....she had it with an agent....but she found it all too stressful...it was rented the whole time....I could not believe her reason for selling.....but some people just get too emotional ...about the wrong things
in her case, she was looking to supplement her income for retirement in 10-15 years...there was not enough in super, she had a steady job etc....but could not hack it
it takes all types....but I believe you need a bit more stamina than the rest, and to believe in the plans /goals you set for yourself
robots,
seems all of us positive property types have a happier disposition, and or attitude to the current doom....and look forward to the future....
I have a brother....always sees the gloomy side of anything...a pessimist, and I am the opposite..well usually....its human nature or something
cheers
seems all of us positive property types have a happier disposition, and or attitude to the current doom....and look forward to the future....
I have a brother....always sees the gloomy side of anything...a pessimist, and I am the opposite..well usually....its human nature or something
cheers
Thanks for clarifying. However it sounds to me that all you are saying is for every successful transaction there must have been a buyer and a seller willing to meet/make the market. Right now the scales are tipped in favour of the buyers in many/most market segments, so yes to sell it's more the seller that has to meet the market it seems. This results in a fairly stable market where buyers (collectively) determine a base-line price determined mainly from past sales that have occurred of similar property in the last couple of years, and sellers meet this, rather than the boom time situation where buyer competition forces prices ever upwards. However, the current situation is not forcing prices down from what I have seen, as there are still enough buyers around to keep the price baseline in-line, meaning sellers are not forced to take the real "low ball" offers.
As Kincella stated - many people may be selling because this type of market provides a good opportunity to upgrade - especially if prices are at least stable, providing a level of certainty around the cost of upgrading that in boom markets isn't there and actually adds quite a risk to the equation. If prices have fallen, but have fallen more in higher price ranges, then upgrading makes even more sense in such a market.
As for my sale - yes I sold my PPOR for probably 5% less (which on a $1M property is $50k) than I would have expected at the peak of the market (which was about mid 07 -> Feb 08 where I live). However, as with anything trying to pick the very top or the very bottom of a market is a black art and few (be they bulls or bears) can do this, unless they get lucky. It takes a few months just to get a property ready for sale and onto the market, then 6-8 weeks to sell, so you can't just respond immediately to a change in the market. Despite this we think we "saved" far more than we "lost" through the upgrade process as compared to trying to do it in a booming market.
Cheers,
Beej
hello,
yes Kincella, you can see it as we walking tall down the street man
as their eyes hit us though the heads of the doom brigade lift, their step gets a little more upbeat and fingers crossed life begins a new path
the sun shine's bright on us all day long for helping out society and following the philantropist way
thankyou
robots
yes Kincella, you can see it as we walking tall down the street man
as their eyes hit us though the heads of the doom brigade lift, their step gets a little more upbeat and fingers crossed life begins a new path
the sun shine's bright on us all day long for helping out society and following the philantropist way
thankyou
robots
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:band Sunshine and lollipops...................:band
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With the amount of unsold properties currently on the market and the amount of buyers participating then I guess the masses just don't have your appetite for risk.
I'm sure there are plenty of "cashed up buyers" just waiting on the sidelines however ~ just wish that somebody would post a factual link or an ABS statistic telling the masses this instead of hear-say from REA's.... and if that statistic about sitting on the sidelines is true, what message is it sending to current vendors? Why aren't the buyers jumping into the market with their ears pulled back when it's supposedly such a great time to buy???
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Yes ~ agree with this in respect to the lower end of the market currently being in a relative state of equilibrium.... still not seeing anywhere near equilibrium in middle-upper middle-upper end of the market, and what may now be considered "low-balling" is probably not far off the mark for where the vendors need to be setting their prices to see anything near the turnover the market is used to.
Makes sense - yes, but... as mentioned above, if the middle-upper middle-etc is not yet in a state of equilibrium, it would explain why buyers are not yet jumping in at this particular point in time. I would interpret this lack of activity in these sectors as a signal that prices have overcooked significantly in the last few years and are yet to come back down to sustainable growth levels. If there is no confidence in the economy in it's current state then there is no floor under these inflated prices in the short term.
It's good you have done well and I have no doubt that you are in a financially secure position regardless what happens to the economy.
Hypothetically, how do you think "Joe/Jane Somebody" would fare though with a rather large mortgage on the PPOR, IP loan, car loan, credit card debt, school fees, rates, insurance, cost of living, etc, etc and then either Joe or Jane lose their job and then have to deal with selling either the IP or the PPOR at a loss. It may not have been an issue for yourself but there are a lot of people out there who will feel the pinch if they are selling into this environment and don't achieve the prices they were expecting.
Well of course a hypothetical couple in the situation you describe could be in trouble if one of them lost their jobs. However, a few points:
* Presuming that most of these commitments were made (or survived) while interest rates were much higher, the cost servicing said debts is now 40% less than at this same time last year. That would have left quite a bit of scope for an unplanned reduction in income without going under.
* There are many actions they could take - including pulling kids out of private school and putting them in public, selling the car that has a loan on it (although why you would have a mortgage with some equity and a separate car loan at a higher interest rate I don't know - same goes for CC debt - see the other thread here in that topic!). Cut back on discretionary spending (eating out, holidays etc etc). These actions, combined with the lower servicing costs due to lowered interest rates, plus the dole, the remaining income, and the family welfare assistance they would now get as well, might enable existing commitments to be met.
* Worse case if the above still see's them going backwards, then they sell either their investment property, or perhaps the PPOR if the mortgage is really that large (as it's interest is non tax deductible and it doesn't have the rental income to support it). If they had bought in the last year, then they may well sell at a loss, but if they bought 2 years or longer ago, and even if that was in Perth or SEQ, even at today's prices they could sell at a profit, eliminate the associated debt, use the profit to pay down the other property mortgage and probably be able to get by.
So your hypothetical sounds bad if you imagine a large number of people in that situation, but the reality is that not many people, as a proportion of existing property owners, would be in the worse case scenario at all (Ie everything else + bought the IP or PPOR in the last year). And then of that very small proportion, only another very small proportion are likely to be impacted by rising unemployment directly (95.2% of people who want one currently still have their job - probably even higher ratio amongst property owners). So you have a hypothetical worse case set of circumstances that apply to a small proportion of a small proportion of the property owning population - and then even that tiny group can take all the actions I described above to get by meaning only a proportion of those will actually be forced to sell or get foreclosed on.
So therefore the implication that there is (or will be) this massive flood of desperate, forced property sales just because unemployment ticks up a couple of % is IMO a false one. And in Sydney and Melbourne at least all the evidence do date is that is not happening at all.
Cheers,
Beej
hello,
yes spot on Beej, the RBA has also noted that people are not adjusting their weekly/monthly mortgage payment down to take advantage of the interest rate declines
but instead keeping the payments the same and as such the big meany mortgage is being cleared out earlier,
some are calling for legislation for compulsory payment change,
i know i know i know, everyone is under mortgage stress and no one will have a job in 2010
thankyou
robots
yes spot on Beej, the RBA has also noted that people are not adjusting their weekly/monthly mortgage payment down to take advantage of the interest rate declines
but instead keeping the payments the same and as such the big meany mortgage is being cleared out earlier,
some are calling for legislation for compulsory payment change,
i know i know i know, everyone is under mortgage stress and no one will have a job in 2010
thankyou
robots
What they want you to pay less by legislation is that what you Robots
hello,
some economists (not sure what they do) are calling for the compulsory reduction so the savings are placed/spent in society
some advisors and I know many here from the rent crew promoted placing as much funds into Super and paying out mortgage when funds can be taken out at retirement (hahahaha)
i am just plodding along
thankyou
robots
some economists (not sure what they do) are calling for the compulsory reduction so the savings are placed/spent in society
some advisors and I know many here from the rent crew promoted placing as much funds into Super and paying out mortgage when funds can be taken out at retirement (hahahaha)
i am just plodding along
thankyou
robots
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am i stupid to go and buy my first house in the next month or so?
i have a job
if i buy a little 1br for 250k, is it just going to cost 233k after the FHOG expires?
that would be a sizeable drop off in price....
i have a job
if i buy a little 1br for 250k, is it just going to cost 233k after the FHOG expires?
that would be a sizeable drop off in price....
How much rent would you otherwise be paying for a little 1 br place? Is it more or less than the interest on the $233k you would have as a mortgage? In 10 years, how much rent do you think you would be paying if you didn't buy, and how much do you think your 1 bedder would be worth then if you did? What would it cost you (if anything) to wait and buy in 6 months? Factor in different scenarios - falling prices, flat prices, and rising prices.
Do some sums and the answer should become clear to you (whatever it is - everyones circumstances are different).
Cheers,
Beej
hello,
the fhog has been around for years, and does not just end on that date the extra's are scheduled to end
and yes sinner RE industry should get just as much propping as any other, dont many want fairness and equality for all
thankyou
robots
the fhog has been around for years, and does not just end on that date the extra's are scheduled to end
and yes sinner RE industry should get just as much propping as any other, dont many want fairness and equality for all
thankyou
robots
the average mortgage is 240,000....at 10% interest thats 24,000 pa , at 5% interest its 12,000....whats the big deal/ noise about people losing jobs and therefor their house ??? the cost has reduced...made it cheaper to stay in the home....how much to go out and rent the same thing ???? it would probably cost you more to rent....
I could be wrong..but gained the impression some on here just read headlines...and the media pick out the bad parts for the headlines..and ignore the positive news in the story
aarrhh traps for players
I could be wrong..but gained the impression some on here just read headlines...and the media pick out the bad parts for the headlines..and ignore the positive news in the story
aarrhh traps for players
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well 1br apts around where I want to buy seem to be yielding around the 6% mark, so prob better I buy, i'm reckoning, maybe we even get a sneaky rate cut next month to really tip me over the edge
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