House prices to keep falling for years

[robots]

hello,

check:

rpdata.com.au

see melbourne, great results

as Beej has eluded to, many many many markets across australia

gains are well and truly locked in for many

thankyou
robots

 

[CamKawa]

I'm also wondering why the hell the RBA is banging on about this heavily right now anyhow (two announcements in the last 2 weeks), is their role now to put the general publics mind at rest on their house price? If so, why? Seems pretty bizarre behavior to me compared to their usual mandate, almost to the extent of trying to stave off panic. i.e. there is no need to tell a room full of people "don't worry about the snake!" unless the room is already ****-scared of a snake somehow being in the room.

The RBA is the lender of last resort. When house prices crash here the big 4, in particular the CBA, Australia's largest home lender, may be in a world of financial pain. The RBA is spruiking house prices for all they are worth (not much as you have stated) to avoid having to bail the banks out.

I wouldn't be surprised to see the CBA once again being run by the government when the dust has settled on this mess.

 

[UBIQUITOUS]

That 830,000 vacant houses stats is rubbish. It's from the 2006 census and all it means is that when the census person came knocking no-one was home - it does not mean the house was empty/vacant. In fact the census has no practical way to measure this properly. So the basis of half of Ubiquitous' article is totally debunked.... and the first half actually presents some pretty solid arguments why prices will in fact hold up (all the quotes from the RBA etc).

So 830k households just happened to be out when the census people came around...yeh right! I do agree that the figures might be stretched, but no way is there a greater demand than supply. If this were the case, there would be no RE listings and people would be living on the street.

I prefere this piece of research which provides non vested interest research as opposed to the usual suspects - Residex, REIV et al:

http://www.earthsharing.org.au/wp-content/uploads/iw2lh-08-report.pdf

"“The 2008 I Want to Live Here report has found a 7% genuine vacancy rate in the inner city as compared to the much publicised 0.9% vacancy rate. The reported rate is a shocking one tenth of the genuine vacancy rate that speculators withhold from the market” said report author Tohm Curtis"

So keep trying - we've waiting for the crash predicted here on ASF for many years now, still hasn't happened. The US started crashing 2 years ago now......Still isn't happening here.

Errr...yes it is. Maybe not on your street, but in most of Australia, it is happening. You see, your 'safe area' for investment is getting smaller and smaller. Soon, you'll be saying that as long as you buy a house exactly the same as yours in your street, RE is a great investment.

In fact auction clearance rates and prices are rising in our major capital cities it seems (http://www.rpdata.com/news/rp/20081231_media.html), interest/lending rates at all time lows, large numbers of FHBs active and upgraders now coming into play. Rental returns are at historically high levels (average 5% for houses and 6% for units across Sydney right now), however investors won't return in large numbers until the economy improves - and when they do the bears are going to be taken by surprise. Banks are well capitalised and lending happily - lending for residential housing seems to have bottomed late last year and has been rising steadily since (http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument).

I see you're now quoting ABS figures, whereas at the beginning of your post you rubbished ABS stats. Typical Beej. As for RPdata 'research', lets not even go there.

 

[gfresh]

More incorrect data in the press, conveniently leaving out the -1.89% falls for Brisbane last quarter that I put up yesterday from the same table they are reading from

http://business.theage.com.au/business/alarm-as-wealth-goes-into-freefall-20090415-a7hi.html

Separately released Residex data showed house price growth in every city but Perth (down 3.9 per cent) in the first three months of the year, with Melbourne prices up 0.5 per cent over the three months and 1.6 per cent in March.

Journos can't even read a basic table..

 

[Beej]

Errr...yes it is. Maybe not on your street, but in most of Australia, it is happening. You see, your 'safe area' for investment is getting smaller and smaller. Soon, you'll be saying that as long as you buy a house exactly the same as yours in your street, RE is a great investment.

Except all the price data coming out for Q1 2009 is showing that prices INCREASED everywhere except Perth and Brisbane (where prices went ballistic in 2006/2007)..... and even in those cities flats are holding up quite well......so much for the shrinking investment opportunity.... so keep dreaming!

Read this: http://www.residex.com.au/newsletter/source2009_04aMC.html?content=MarketCommentary&from=news0409a

I see you're now quoting ABS figures, whereas at the beginning of your post you rubbished ABS stats. Typical Beej. As for RPdata 'research', lets not even go there.

I didn't rubbish ABS stats - I rubbished your incorrect interpretation of them. ABS stats are unbiased; they are just the numbers. You have to think a little to figure out what they really mean though.

As for 830k people not being home when the census came knocking - that's HIGHLY likely! People go on holidays, travel o/s, travel for business, go out with their friends, visit their family, got work etc etc all the time. It's not a stretch to imagine that 1/10 people at any single point in time would be doing one of those things, and that would mean there was nobody home when the census person came knocking. As for the demand argument in general - it really is undeniable - I don't know why you bears keep trying to suggest there is no shortage of housing in Australia? Try going to rent a flat in inner Sydney right now - 50 people turn up to each inspection! It's about a growing, highly urbanised population, increasing living standards (over the long term) and competition for a basically fixed supply of well located property - kind of obvious to me and most others....

Cheers,

Beej

 

[kincella]

come on boys...this discussion about house prices to crash is just sooooo pedestrian....
facts are, a drop in price of less than 2,3,or 4% in the current GFC climate, that has been dragging on for almost 2 years, seems hardly worth mentioning...
seems its more about wishing and hoping.....what was that song...was it Celia Black ???
there are plenty of affordable houses out there...one to suit everyones price and taste...stop reading the papers and go out and have a look.....

oh oh...you want to buy in the heart of the city...in the middle of everything...well you will have to settle for a unit in that case...the houses will be out of your price range...or deemed unaffordable....
:sheep:

 

[michael_t_f]

Except all the price data coming out for Q1 2009 is showing that prices INCREASED everywhere except Perth and Brisbane (where prices went ballistic in 2006/2007

I could buy back the same house I sold 4 years ago in Brisbane for the same price today.

The unemployment has only just begun, the FHG is about to run out, property prices have just started to decline even at these super low rates and you think it's a good investment at the moment?

 

[Beej]

I could buy back the same house I sold 4 years ago in Brisbane for the same price today.

Oh really? The median price stats for Brisbane suggest otherwise (Q1 2005 -> Q1 2009 shows a median increase in the order of 20%+ in total, including more recent falls), so either the area you used to own in has been hit much harder than the average, or that's what you "think" because it makes you feel better about all the rent you have been paying in the past 4 years instead of owning!

Want to tell us the suburb and we can check the APM data?

The irony this would be far more likely to be true in many suburbs of Sydney than in Brisbane!

Cheers,

Beej

 

[amy997]

Try going to rent a flat in inner Sydney right now - 50 people turn up to each inspection!

Not so true these days. The apartment next door to where i live has been empty all year, The landlord has been desperate to rent it, a month ago he knocked $100pw off the rent but still no takers. When there is an open home no one even shows up. This is a well located 3 bedroom apartment 5km from Sydney CBD in very good condition.
Late last year there was another one in the same block empty, it took 2 months to fill, theres definitely no rental crisis in this area.

 

[tommymac]

http://www.theaustralian.news.com.au/story/0,,25319017-25658,00.html?from=public_rss

This report states that the big four banks have not tightened their loan criteria for first home buyers as much as the general public think.

A $444,000 loan from the CBA would require someone on $70,000 to spend 62 per cent of their monthly income on mortgage repayments, which amounted to $2827 a month. Real Estate Buyers Agents Association of Australia president Byron Rose said a loan of more than $400,000 for someone on $70,000 a year was "absolutely too much".

 

[singlefished]

Oh really? The median price stats for Brisbane suggest otherwise (Q1 2005 -> Q1 2009 shows a median increase in the order of 20%+ in total, including more recent falls), so either the area you used to own in has been hit much harder than the average, or that's what you "think" because it makes you feel better about all the rent you have been paying in the past 4 years instead of owning!

Want to tell us the suburb and we can check the APM data?

The irony this would be far more likely to be true in many suburbs of Sydney than in Brisbane!

Cheers,

Beej

Beej, if you take private messages I can send you the address of the block of units I rent in and you can check the sales history for yourself in onthehouse.com.au with sales history going back to when the units were first on the market in 2004.

Only 2 of the 10 units have changed hands since the building was first completed with one rising 2.5K since initially selling in May 2004 (sold Nov 08) and the other dropping 18K since initially selling in May 2005 (sold Feb 07).

For obvious reasons I'm not going to be posting my residential address on a public forum!!!

Not saying that this is the norm all over Brissy, but was rather shocked to see the actual selling price of both properties (especially the sold Feb 07) after noting what the sold Nov 08 had been marketed at during the for sale period.

 

[robots]

Beej, if you take private messages I can send you the address of the block of units I rent in and you can check the sales history for yourself in onthehouse.com.au with sales history going back to when the units were first on the market in 2004.

Only 2 of the 10 units have changed hands since the building was first completed with one rising 2.5K since initially selling in May 2004 (sold Nov 08) and the other dropping 18K since initially selling in May 2005 (sold Feb 07).

For obvious reasons I'm not going to be posting my residential address on a public forum!!!

Not saying that this is the norm all over Brissy, but was rather shocked to see the actual selling price of both properties (especially the sold Feb 07) after noting what the sold Nov 08 had been marketed at during the for sale period.

hello,

this is the huge problem which the community will face, new construction

"buy off the plan" "stamp duty savings" "architect designed"

many "off the plan" joints in Southbank, Docklands here in Melbourne would only just be at or slightly above purchase price today

yet a 70's block would of achieved some fantastic results, paradise

a developer won't build if makes no money and fair enough,

have a great day brothers, walk tall and say hi to the person in the street

thankyou
associate professor robots

 

[kincella]

Robots, there were some unique problems with the Docklands area...thought it was Centro that was taken to court...could be wrong...need to google and get the stories....
funny business going on at the time....the manager would not allow people to sell their units on completion...or use another agent for sale...funny business with rents too....seemed a bit overpriced at the time

when I looked at the prices about 6 months ago...they were comparable with Toorak prices....but without the Toorak benefits...ie shopping, parks, Chapel St nearby etc

 

[gfresh]

Only 2 of the 10 units have changed hands since the building was first completed with one rising 2.5K since initially selling in May 2004 (sold Nov 08) and the other dropping 18K since initially selling in May 2005 (sold Feb 07).

I can also give a couple of examples of people I know who's units would probably only fetch close to what they paid for it in the last 3-5 years in fairly central Brisbane and Gold Coast areas. Not OTP either.

 

[Beej]

Beej, if you take private messages I can send you the address of the block of units I rent in and you can check the sales history for yourself in onthehouse.com.au with sales history going back to when the units were first on the market in 2004.

Only 2 of the 10 units have changed hands since the building was first completed with one rising 2.5K since initially selling in May 2004 (sold Nov 08) and the other dropping 18K since initially selling in May 2005 (sold Feb 07).

For obvious reasons I'm not going to be posting my residential address on a public forum!!!

Not saying that this is the norm all over Brissy, but was rather shocked to see the actual selling price of both properties (especially the sold Feb 07) after noting what the sold Nov 08 had been marketed at during the for sale period.

I can also give a couple of examples of people I know who's units would probably only fetch close to what they paid for it in the last 3-5 years in fairly central Brisbane and Gold Coast areas. Not OTP either.

Sure, I don't dispute these examples - newly built apartment blocks have a unique situation for 2 reasons. The first it is easy for an area to be over-built, which will obviously put a lid on prices when original purchasers (or the developer) sells over time. The second reason is that investors get a HUGE tax break from the building depreciation allowance on newly constructed units in addition to the normak negative gearing benefits. This results in a situation where yuo can actually sell at the same or a lower price than the original purchase yet still have actually made a profit.

Bottom line though is in Brisbane at least, according to the median price figures, that situation (currently) is the exception rather than the norm.

Cheers,

Beej

 

[nth brisbanite]

I could buy back the same house I sold 4 years ago in Brisbane for the same price today.

That's so over the top that it's not worth considering. I'm a very active investor in Brisbane and there would not be one suburb that has not gone up substantially over the last 4 years. For example, properties that I have bought in Bracken Ridge, Kallangur, Bald Hills and Moggill would have gone up at least 20% in the last 3 years.

In the first home owners' price range, houses are selling like hot cakes at the moment at prices which are surprising everyone. No one knows what is going to happen with FHB grant - I'd be surprised if it doesn't continue in some form, maybe not 14000 (existing)/21000 (new) but possibly 10000/15000.

 

[gfresh]

.. and so it follows they will go up 20% in the next 3 years

Believe it or not, there is not infinite numbers of FHB out there.. Even if it continues, that effect will taper off. Most are buying right now with the expectation that it is not going to continue, even if it does, they would have already bought. But I agree these 3 months will be a great time for sellers

 

[kincella]

of course care needs to be taken...but look at the stock market today...back to Nov 08 levels

and now this british economist...suggests the worst of the recession may be over.....now I know these types hardly ever get it right....and I usually dont take too much notice of them...
seems everyone has been in lock down and saving....hence retail figures, cars , harley davidsons etc taking a break....but there is much more confidence out there...and one would be wise to listen and watch for themselves....
http://www.news.com.au/business/story/0,27753,25346209-31037,00.html

 

[gfresh]

Across from SS.. further lending tightening, or maybe just suitable diligence.. this from ANZ. These could be in place another 12-36 months, or maybe even permanently.

A 16% increase in living expenses, plus I think it is .25% increase in rates margin.

In response to the continuing softening in the economic environment, effective Monday, 20th April 2009, ANZ will be making changes relating to serviceability criteria.

These changes reflect ANZ’s prudent and measured response to the current economic environment and ensures the bank and our customers are well positioned for any weakening in the economy throughout 2009.

It also reflects a need for customers to state what their living expenses are, rather than just using the default rates which may not adequately reflect their circumstances. Your support in obtaining this information is important to help customers help themselves as conditions tighten.

For all loans repayments, ANZ and OFI, a sensitivity margin of 2.25% will be applied to the standard variable rate (SVR). Note: Equity Manager & Simplicity Plus accounts assess on the actual rate plus the new 2.25% sensitivity margin.

As you are aware interest rates are at an all time low and as prudent lenders we need to ensure that we position our customers for any changes to the rate over the life of their loan.

Also effective Monday, 20th April will be increases to living expenses for single and joint applications and also for any dependants.

Old New
Couple $1,380 $1,612
Single $ 950 $1,105
Child $ 340 $ 394

Please note that these are to be used as minimal benchmarks only.

 

[UBIQUITOUS]

.. and so it follows they will go up 20% in the next 3 years

Believe it or not, there is not infinite numbers of FHB out there.. Even if it continues, that effect will taper off. Most are buying right now with the expectation that it is not going to continue, even if it does, they would have already bought. But I agree these 3 months will be a great time for sellers

Good point G.

The FHB rush is future demand brought forward. I expect FHB purchases to plummet.