House prices to keep falling for years

[CamKawa]

What a hoot, if they went bersek at the CBA they will be totally out of control with rage over this, or they'll have to appear so.
I can hardly wait for the news tonight.

It'll get a mention on the news tonight but I don't know that Wayne will go mental over it because they have raised fixed rates not the variable lending rate. Time will tell though.

 

[MrBurns]

From Crikey - note the link to
http://sqmresearch.com.au/
this looks interersting.

BIS Shrapnel property assessment BS
Adam Schwab writes:



Property research company BIS Shrapnel has produced its regular assessment of the prospects for Australia’s residential property market and unsurprisingly, the news from BIS is very positive. The report suggested that Melbourne and Sydney residential property could increase in value by as much as 19% by 2012. Melbourne median house prices are tipped to increase from $425,000 to $507,000, while Sydney medians are forecast to rise from $530,000 to $630,000.

BIS Shrapnel senior project manager, Angie Zigomanis, told media that “we expect rising confidence in the prospects for an economic recovery in 2010, so investors are likely to return in greater numbers, attracted by increased rental returns and low interest rates.”

We are not sure what economic data Ms Zigomanis and BIS have been analyzing, but perhaps they haven’t been keeping too close an eye on the latest moves by Australian banks to raise interest rates in response to increasing wholesale funding costs (and lack of competition). Further, the interest rate yield curve suggests that rates are likely to rise, rather than fall in the coming years (interest rates are currently at historical lows). Meanwhile, the US and UK are undertaking quantitative easing (also known as printing money), in a desperate bid to stave off asset-deflation, potentially leading to inflation and the need for further interest rate rises.

House prices are currently being boosted by the First Home Owner’s Grant, which, coupled with loan-to-valuation ratios of upwards of 90%, has resulted in a boom in the otherwise "affordable sector" of the housing market. (This boom has spilled to the upper-affordable level, as those who sell properties to first home buyers have more to spend on their upgrade).

When the boosted FHOG falls away later this year, if interest rates return to 7-8%, it is a more logical response that house prices will fall in the coming years, rather than rise. While auction clearance rates have spiked to upwards of 80% in Melbourne (and above 70% in Sydney and Brisbane), this appears to have been a result of panicked buying by first home owners, as evidenced by lending commitments to the first home sector hitting 28% earlier this year (in 2007, the figure was closer to 10%). The Financial Review noted this morning that the number of first home owner’s grants was up 67.5 percent in April, compared with the corresponding period in 2008.

As for investors re-entering the market, that is dependant on yields and forecast capital growth. Unless unemployment stays at a reasonably low level (it is forecast to rise to above 8%) and interest rates don’t spike, it is difficult to envisage investors re-entering the property sector.

BIS’ most recent report is not the first time that the researcher has been optimistic on the performance of the property sector -- in March 2008, BIS claimed that house prices would rise by 40% within five years (conveniently similar to the average 7.9% annual increase over the past two decades).

One significant yet often unreported problem faced by many home-buyers is a significant information asymmetry. As Crikey has previously noted, unlike publicly traded equities, it is reasonably difficult and expensive for home buyers to obtain detailed information regarding historical price data regarding specific properties. (Larger investors and real estate agents would obtain such information from the likes of RP Data, however, the time and expense often precludes "mum and dad" home buyers from accessing such information).

This problem may be alleviated somewhat through the development of an on-line property information service by SQM Research, a property advisory and forecasting researcher company run by former Australian Property Managers chief, Louis Christopher. SQM’s product (expected to be released shortly) will allow users to determine how long a listed property has been on the market, if the listed price has changed over that period and what the last sale price of the property was (for properties listed from more than 60 days). The "Home Discounts Report" costs $39 per suburb but unfortunately, does not extensively cover Victoria and Western Australia due to privacy requirements.

 

[kincella]

ants is really too nice a description for them...ants are actually hard working and smart...whereas those 5 idiots Krud, swan, tanner silliard and pong...are plain con artists, deceitful....and various more accurate words to best describe them.....

the govt will not admit its guarantee is causing the problems with the banks....so who will face off and win this bout....the banks have put it up there in their face....by raising rates.....its up to swan and tanner now to drop the guarantee.....grrrrrrrrrrrrrrrrrrrrrr

oh and btw....NSW govt offer of incentives to new home buyers...and still 3000 for fhb for a new house still in place......

NSW moves to kick start housing sectorJune 16, 2009 - 12:54PM
The NSW government is hoping to kick start the state's housing sector by slashing the stamp duty on newly built properties for at least six months.

Under the government's NSW Housing Construction Acceleration Plan, buyers will receive a 50 per cent stamp duty cut on newly built houses capped at $600,000 from July 1 until the end of 2009, with plans to review the measure in 2010.

In his first budget, Treasurer Eric Roozendaal said the plan would provide a $64 million boost for the housing construction industry and put $11,245 back into the pockets of home buyers.

"This measure will benefit anyone buying a new dwelling including empty nesters, families who need more room, and mum and dad investors seeking the security of bricks and mortar," Mr Roozendaal said when delivering the budget in parliament on Tuesday.

The plan will not apply to first home buyers because they already pay no stamp duty on purchases up to $500,000.

The state government will extend its $3,000 first home buyers supplement for newly-constructed homes until June 2010.


http://news.theage.com.au/breaking-...-kick-start-housing-sector-20090616-ceux.html

 

[Aussiejeff]

ants is really too nice a description for them...ants are actually hard working and smart...whereas those 5 idiots Krud, swan, tanner silliard and pong...are plain con artists, deceitful....and various more accurate words to best describe them.....

Dear kincella,

Please refrain from using silly names and instead address these pre-eminent pollies by their proper names in future, ergo... Kruddud, Schwonk, Tanher, Blowhard and Pwong.

Thank you.

The Thought Pullees

 

[Aussiejeff]

What a hoot, if they went bersek at the CBA they will be totally out of control with rage over this, or they'll have to appear so.
I can hardly wait for the news tonight.
What a side show, and the banks are watching these 2 ants leaping about from their offices on the 85th floor of some building they own laughing their heads off.

Hark!

Do I hear piercing, shrieking, gurgling noises from the general direction of CanBurYa?

Mmmm.

Muzak to mine ears....

 

[CamKawa]

Thank God this idea died a thousand deaths. Just how low will Rudd go to keep the hot air in the housing bubble?

'Ruddbank' defeated in Senate

 

[MrBurns]

Thank God this idea died a thousand deaths. Just how low will Rudd go to keep the hot air in the housing bubble?

'Ruddbank' defeated in Senate

The absolute truth of the matter is that the longer he keeps it going the worse the end result will be.

 

[aleckara]

Thank God this idea died a thousand deaths. Just how low will Rudd go to keep the hot air in the housing bubble?

'Ruddbank' defeated in Senate

The answer should be obvious. The Government would probably resort to printing money if necessary to keep it going I believe. I wish this were not true but it is. Of course the government would paint it as 'saving the economy' or something like that. After all if our houses are worth nothing this country has nothing left besides a few holes in the ground. Our houses are our main investment despite the fact that is really is just debt money churning around.

 

[Quincy]

As stated by Swan in the referenced article : -

http://www.abc.net.au/news/stories/2009/06/16/2600073.htm

Federal Treasurer Wayne Swan says the Opposition is risking the livelihoods of thousands of people by voting against it.

Mr Swan says the Senate's actions mean that thousands of Australians involved with the commercial property sector could lose their jobs including plumbers, electricians and carpenters.

No need to worry about the underlying risk / cost that "RuddBank" posed to tax payers, no need to worry about the commercial property sector being accountable for its own destiny, no need to worry about the details. It's ALL about and ONLY about (according to Swan) - jobs, jobs, jobs (spin, spin spin).

 

[Julia]

As stated by Swan in the referenced article : -

http://www.abc.net.au/news/stories/2009/06/16/2600073.htm



No need to worry about the underlying risk / cost that "RuddBank" posed to tax payers, no need to worry about the commercial property sector being accountable for its own destiny, no need to worry about the details. It's ALL about and ONLY about (according to Swan) - jobs, jobs, jobs (spin, spin spin).

Ditto the situation in Qld where the govt itself predicts it will be eight years before they are likely to be out of deficit, but don't you worry about that, as Joh would have said, it's all to protect jobs, jobs, jobs.

 

[Mc Gusto]

weekend results are scary,. Punters with auction fever. Recession? Bust all done and time for boom again? Seriously question the current 'bubble' and those buying in it. Things are going to get very rough

 

[Taltan]

It seems based on the latest auction clearance rates and new car sales many are not feeling or expecting this recession. So I guess either things aren't that bad or there are a lot of FHB out there.

Regarding BIS I notice they dont give the real expected rise in median prices but rather what the actual price will be. I think in Melbourne they are expecting the median to bo $507,000 in 2012. Now do they tell us what inflation rate they are expecting? Govts have thrown a lot of money at the GFC so we are now in a period where it is very difficult to predict what inflation will be in 2012. We all know at some point debt needs to be repaid and interest rates will rise but how BIS or anyone knows when that point is I am very skeptical about. Are they saying 2010 or 2014 when they predict the 2012 price?

You cannot forever get out of debt by incurring more debt.

 

[explod]

Ditto the situation in Qld where the govt itself predicts it will be eight years before they are likely to be out of deficit, but don't you worry about that, as Joh would have said, it's all to protect jobs, jobs, jobs.

and "dont' you worry about that" it is about jobs jobs and more jobs. Where I live in a fairly new estate every second household relies on a building trade job as the prime wage earner.

weekend results are scary,. Punters with auction fever. Recession? Bust all done and time for boom again? Seriously question the current 'bubble' and those buying in it. Things are going to get very rough

and the scenerio is scary. We have put too many eggs in the one basket.

 

[Mc Gusto]

and "dont' you worry about that" it is about jobs jobs and more jobs. Where I live in a fairly new estate every second household relies on a building trade job as the prime wage earner.




and the scenerio is scary. We have put too many eggs in the one basket.

Agreed - this market is going to find a lot of buyers in the current market in negatibe equity by 2010...In my opinion

 

[CamKawa]

Some interesting reading here, apparently house prices are falling according to the Valuer-General Robert Marsh.

Pressure to slash land tax

"You would expect the median house price in metropolitan Melbourne to be down in the order of 10 to 15 per cent from the last valuation," Mr Marsh said. "All indications are that the impact on commercial and industrial (property) has been greater than residential."

Mr Marsh said he expected Melbourne house prices would have fallen from the current median of $411,500 to about $370,000, once the new valuations were finalised. Land tax bills will be issued again by March, but it will be 18 months from now before the reduced values register on notices because of a time lag.

"Those suburbs that went up the most in the boom are also those that have gone down the most," Mr Marsh said. "The decreases are significantly higher in the inner ring, meaning within 10 kilometres of the city. When it comes to the outer ring, 20 kilometres plus, around all the new estates and the urban growth boundary, you will actually see increases, stimulated by the first home buyers initiatives. Inner councils like Melbourne, Port Phillip, Stonnington, Boroondara, Glen Iris, they're the ones that are going to have to make some decisions about their rates in the dollar, based on the fact their house price market has been affected more than some of their outer suburban neighbours."

 

[wayneL]

Agreed - this market is going to find a lot of buyers in the current market in negatibe equity by 2010...In my opinion

The latest from Blighty:

http://www.dailymail.co.uk/news/art...-15-Prime-mortgages-fall-negative-equity.html

The Middle Britain debt trap map: Curse of negative equity hits one in ten
By OLINKA KOSTER
Last updated at 7:27 PM on 24th June 2009

Comments (62)
Add to My Stories

One in ten borrowers is in negative equity, a report shows. It warned that further falls in house prices could see the proportion soaring to one in three.

The international ratings agency Fitch said its findings point to a surge in mortgage defaults and repossessions.

 

[gfresh]

..meanwhile, Australia continues not to experience the great housing crash that the rest of the world has, setting up for our own large one in a few years time. I think we are putting down the seeds for some rampant speculation in the next 10 years in property.. "property was the only safe investment during the crash of 07/08/09", perpetuating the myth that house prices can never fall significantly. Going to be a doozy...

Land tax bills will be issued again by March, but it will be 18 months from now before the reduced values register on notices because of a time lag.

How nice of them... up here they decided to stop valuing things for a while, to avoid nasty hits to council coffers due to falling values. It seems you only value on the "up", not on the way down.

 

[Gordon Gekko]

I tried to buy a house in Queenstown N.Z last year. Beautiful house over looking the lake.
It had a counsil valuation of 610k but the vender wanted 500k. I offered 440k and raised it to 450k but it fell apart after that.
I just saw the new counsil valuation for Mar 09 and its now valued at 450k
160k drop!

Glad I didn't get it!

G

 

[kincella]

obviously this rich kid thinks differently.....and most of you have such a small time frame...one year..two years...and look how much you have saved....but forget how much rent you are paying....
hehehehehe.................................:sheep:

THE software entrepreneur Simon Clausen is Sydney's most active property investor, having bought $34 million worth since last October.

Mr Clausen, who made his debut on the recent BRW Rich List with a $180 million fortune, has snapped up nine properties since selling his business last year.

The 32-year-old recently added another Clareville beachfront to his portfolio, paying $2,789,000 for a property listed with $3.5 million hopes.

He has also bought a Balmain East property listed at $2.49 million for $1.73 million.

http://business.smh.com.au/business/tech-tycoon-bets-on-houses-20090626-cztn.html

 

[robots]

Well some good news for robots beej et al. I've decided this thread is a waste of time effort and money. So I would just like to say, that any numbnut who thinks that property will boom within the next 5 years needs their head read.

thankyou

Good bye Good riddance.

hello,

just amazing, i have suffered mental illness for many years as well, life goes on man its no big deal

thankyou
professor robots