House prices to keep falling for years

[MACCA350]

Did someone mention that the FHOG boost ending is not bringing forward demand and hence not expecting demand to drop off after the deadline?

Link

"I wish I had more time, but the clock was ticking," he said. "We might not have this opportunity again, so when I saw $42,000 was on offer I pushed it through."

"We weren't going to buy, but we probably will because of the grant," she said. "If it wasn't for the rush of the deadline I think we would have carried on renting for a year."

"I am 99 per cent sure we will sign tomorrow ”” I have to rush, you can make a lot with $26,000,"

Seems to me there is a fair amount of demand being brought forward to get in before the deadline.

cheers

 

[ROE]

Interesting chart from REIV.
http://data1.reiv.com.au/trendchart/default.aspx

It would seem that property prices can go down and are still trending down in Victoria from peak to end of 1st qtr 09 - 12.5% fall.

Don't tell anyone, it is different here in Oz.

Just waiting for the 1st qtr 09 stats from the ABS to get a clearer picture.

Cheers

It's called imputed valuation effect, it play nice in the bull market, it shall salvage in a bear market... what the hell is imputed valuation you may ask?
You see it first hand in the last 18 months in the stock market

Let me use housing as an example (apply to stock or business also), say your house you purchased for 300K and you rent out for 300 bucks a week and contract sign for 2 years.

couple months later a house down the road similar to your sell for $350K so you revalue your house and it came to 350K..wow awesome..I'm now 50K richer.... but what most people failed to understand is it's just imputed value, you haven't done a god dam thing, the rent hasn't increase, economy hasn't perform any better, people output or productivity hasn't increase.

but the sad thing is people then used that imputed value to borrow more to buy more imputed value assets (boom times) or take out and buy a new car and telling themselves this **** can go on forever, pretty damn easy to get rich this property investment stuff

so now your debt has increase as the result of the imputed valuation while productivity hasn't increase at all

now if imputed valuation can magically goes up so can it magically reverse into gear but the reverse is savage as people increase their debt based on imputed valuation during the good time and a domino effect has link all their assets into this imputed value...and banks hold all these assets in their hands as collateral...

let kick the reverse gear shall we because people losing job as a starting point.

so house down the street now sell for $330K, people revalue your property
to 330K, next house sell for $300K they revalue your property downward to $300K and once they do this a while, chaos kick in and banks who seize your asset due to job lost or over-commitment start to compete with other banks to get rid of the assets to safeguard further fall... all your imputed value assets now in a kaput and you are at the mercy of the banks.

No housing shortage or any other reason people come up with will stop this onslaught...and the ball on this onslaught has just start to roll

Happy investing and remember house price double every 7 years... so don't give up keep striking for that 10 properties in 2 year stuff...

 

[Lancelot]

It's called imputed valuation effect, it play nice in the bull market, it shall salvage in a bear market... what the hell is imputed valuation you may ask?
You see it first hand in the last 18 months in the stock market

Let me use housing as an example (apply to stock or business also), say your house you purchased for 300K and you rent out for 300 bucks a week and contract sign for 2 years.

couple months later a house down the road similar to your sell for $350K so you revalue your house and it came to 350K..wow awesome..I'm now 50K richer.... but what most people failed to understand is it's just imputed value, you haven't done a god dam thing, the rent hasn't increase, economy hasn't perform any better, people output or productivity hasn't increase.

but the sad thing is people then used that imputed value to borrow more to buy more imputed value assets (boom times) or take out and buy a new car and telling themselves this **** can go on forever, pretty damn easy to get rich this property investment stuff

so now your debt has increase as the result of the imputed valuation while productivity hasn't increase at all

now if imputed valuation can magically goes up so can it magically reverse into gear but the reverse is savage as people increase their debt based on imputed valuation during the good time and a domino effect has link all their assets into this imputed value...and banks hold all these assets in their hands as collateral...

let kick the reverse gear shall we because people losing job as a starting point.

so house down the street now sell for $330K, people revalue your property
to 330K, next house sell for $300K they revalue your property downward to $300K and once they do this a while, chaos kick in and banks who seize your asset due to job lost or over-commitment start to compete with other banks to get rid of the assets to safeguard further fall... all your imputed value assets now in a kaput and you are at the mercy of the banks.

No housing shortage or any other reason people come up with will stop this onslaught...and the ball on this onslaught has just start to roll

Happy investing and remember house price double every 7 years... so don't give up keep striking for that 10 properties in 2 year stuff...

Just as well us pi's don't all do that then hey?

And it takes a lot more than 1 cheaper/distressed sale to change the valuations.

 

[singlefished]

Some commentary about the shocking car sales figures which appears to be suffering just as badly as the housing industry.

http://business.smh.com.au/business/car-sales-plunge-but-hyundai-thrives-20090505-atcc.html

"The first thing people do in a time like this is defer buying anything they don't have to, but if they have to make a purchase decision, they look at relative perceived value, rather than any aspirational element,"

"The bottom line is that if people are concerned about their employment prospects, no matter what sort of incentive you put in place, they are not going to buy a new car,"

It would be interesting to see if there is any correlation between declining car sales and the declining property sales volumes. Car sales would likely pick up before houses and could possibly read as a leading indicator on future direction.

Fortunately for us however, we don't have to listen to salesmen talking up the car market even when it's declining

 

[singlefished]

hello,

just in case anyone missed the news the other day:

http://abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument

thankyou
singlefished

 

[nunthewiser]

hello,

just in case anyone missed the news the other day:

http://abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument

thankyou
singlefished

THANKS M8 CANT GET THAT LINK FROM ANY OF THE SUNSHINE AND LOLLIPOP GANG

 

[robots]

hello,

just in case anyone missed the news the other day:

http://abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument

thankyou
singlefished

hello,

yeah thanks also mate for the link

thankyou
robots

 

[singlefished]

YOU'RE WELCOME!

 

[nunthewiser]

any thoughts on those results robots ? or are they just evil lies concocted by people with dire intentions ?

 

[robots]

hello,

just going with the flow Nun, wouldnt have a clue what it all means or where things go from here into the future

i like the observations of buyers advocates Morrel & Koren and there commentary which basically supports that good property is holding up well

anything crap is getting sorted

thankyou
robots

 

[singlefished]

Quite interesting to read that's it's apparently only 1 or 2 really, really expensive properties selling at discount which is responsible for the declines.

http://www.theaustralian.news.com.au/business/story/0,28124,25430542-25658,00.html

Real estate analysts say a relatively small number of very expensive houses are being sold at big losses and this is skewing the national figures, despite strong demand from first-home buyers driven mainly by falling interest rates.

Funny how this top 5% of the market was negligible last week.

The ABS use data from the Valuer General, and base their data on suburb clusters. These sporadic very expensive "collapsing clusters" surely cannot carry enough weighting to impact the median as much as is being suggested by the analysts above?

10 The ABS uses stratification to control for this 'compositional' effect by grouping (or 'clustering') houses according to a set of price determining characteristics. The finer the level of stratification available, the more similar or homogenous the cluster of houses will be. However, the finer the level of stratification, the fewer the property sales in the period. Therefore, the clusters defined have to balance the homogeneity of housing characteristics and the number of observations required to produce a reliable median price. The lowest level geographical classification that is commonly available across data sets is the suburb. Therefore, suburbs are the building blocks on which the clusters are based.

http://abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6416.0Explanatory%20Notes1Mar%202009?OpenDocument

 

[satanoperca]

Who would have thought so many people could get so emotional about property. Name call and shouting, what next knives and guns.

Robots, ABS data will be fine, surely we can trust the government to tell the truth.

Just to be fair should we place a margin of error on the results, say +-0.5%. Still not counting my chickens just yet but with rising unemployment, contracting credit, huge government deficits, every dark horse has to have its day.

Inflating the balloon is nearly all complete (FHBG), rapid deceleration would seem the only outcome until equilibrium is reach.

Cheers

Not such a sunny day on the ASX today - gee emotion got the better of me.

 

[CamKawa]

I stole this video link for GHPC

Why people kept paying bubble prices

 

[Lancelot]

any thoughts on those results robots ? or are they just evil lies concocted by people with dire intentions ?

Taken from another forum, not my words but my conclusion as well.
C&P saves me having to type it.

http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail

The ABS--have always focussed on just houses and ignored apartments, semis, terraces etc. So they are ignoring around 20% of the market. More recently, these homes have accounted for about 33% of all sales, so the ABS is missing one-third of the market.
I think the ABS is fine over long multi-year periods where the "noise/errors" in their estimates washout. But in the short-term you can get a lot of volatility.

And when we add in that extra 33% of sales I suppose the REAL figures would look something like this

 

[kincella]

Lancelot...the comments following the article are interesting too

 

[Lancelot]

Lancelot...the comments following the article are interesting too

Yep, plenty can see the negative in anything, must be the colour of their glasses.

Same colour as Bears

But its not about comments, it's about how ABS collects its data, and if they leave out a large % of sales, their data is incomplete and inconclusive.

 

[CamKawa]

And when we add in that extra 33% of sales I suppose the REAL figures would look something like this

Do you know RP Data are?

Well lets have a quick look.

RP Data have significant interests in the mortgage market through Rismark who received an award for "Mortgage Manager of the Year - 2009"

Could they be talking up their own book?

 

[Lancelot]

Do you know RP Data are?

Well lets have a quick look.

RP Data have significant interests in the mortgage market through Rismark who received an award for "Mortgage Manager of the Year - 2009"

Could they be talking up their own book?

Yeah, whats your point?

When your car plays up do you get advice from a Mechanic or do you go to a dentist?

Sounds like you would go to a dentist

 

[UBIQUITOUS]

Yeah, whats your point?

When your car plays up do you get advice from a Mechanic or do you go to a dentist?

Sounds like you would go to a dentist

Very bad example!

 

[CamKawa]

Yeah, whats your point?

When your car plays up do you get advice from a Mechanic or do you go to a dentist?

Sounds like you would go to a dentist

What?