House prices to keep falling for years

gfresh · 31 July 2009

FHB didn't go to the wall in 07 (high interest rates), 08 (falling values) and now 09, but it's going to all start next year? Somehow bringing the middle and top layers down with them? Even though I was bearish when things were falling last year, I've had the sense to step back and realise the worst hasn't happened, and doesn't seem likely to happen.

Even if the FHOG it is simply a pass of money from the hands of the bottom up to the top, what does the top do with it all? Spend it, invest it, do something with it, it's not necessarily going to blow up in everybody's face just because it's not helping the people it claims to help.

MrBurns said:
Rudds popularity is up, that's what this was all about anyway wasn't it ?

.. and something about keeping the economy from crashing, seems to be working so far? Maybe nothing to do with him at all, but all his rheotoric seems to be working on the confidence factor.. Look at Turnbull, the electorate won't even give him the time these days. The Libs were strangely quiet on the FHOG, why might that be ? Because they 100% supported the very same policy and would have done exactly the same if in power! Labor is going to get in next election with 3/4 of the seats in parliament.. How do you feel about that?

kincella · 31 July 2009

you all talk about someone getting that fhb money....the govt gets it, 10% of almost everything, except govt charges...so in the end it just goes back to govt coffers.....
none seem to scream about the same FHB, get $5000 for each kid they produce, then once its born they get about 200 pf for each one...
and that fhb grant is nothing to the govt taxes that are applied to new housing and development....say on average min 25,000 for each block of land, charged and passed onto the new owners, whether they are fhb's or not...
its just a round robbin affair, but the govt gets the most money from all this...well mainly the state govt.s, they get the biggest share
and when you compare aus to the us, over there the owners pay the govt on average 8000 per year in taxes....no wonder so many in the us found owning their own home, was not such a good thing...

Buckeroo · 31 July 2009

kincella said:
you all talk about someone getting that fhb money....the govt gets it, 10% of almost everything, except govt charges...so in the end it just goes back to govt coffers.....
none seem to scream about the same FHB, get $5000 for each kid they produce, then once its born they get about 200 pf for each one...
and that fhb grant is nothing to the govt taxes that are applied to new housing and development....say on average min 25,000 for each block of land, charged and passed onto the new owners, whether they are fhb's or not...
its just a round robbin affair, but the govt gets the most money from all this...well mainly the state govt.s, they get the biggest share
and when you compare aus to the us, over there the owners pay the govt on average 8000 per year in taxes....no wonder so many in the us found owning their own home, was not such a good thing...

I can see what your saying Kincella, but the tax hasn't gone up, only the property values since the latest increase in the grant. The tax has been largely static over this period (except for the increase of GST, due to the increase in the cost of new homes).

Its a shame the states never played ball when the GST came in, the overall tax burden would now be a lot less when buying a home - removing this would have been a better way to go rather than the housing grants to first home buyers.

Cheers

CamKawa · 10 August 2009

Aren't the media in a frenzy. What's the meaning of all this?

Becoming a property mogul

Auction punch-ups as real estate soars

Beachfront sizzle on auction front

satanoperca · 10 August 2009

It's a housing led recovery, hasn't someone told you.

nunthewiser · 10 August 2009

In its latest assessment of the Australian economy, the International Monetary Fund (IMF) has warned that Australian house prices are overvalued by up to 20 percent and that low rates, government subsidies and ongoing strong immigration will continue to push house prices higher. However a "sharp fall in house prices" remains a risk. The problem is being exacerbated by a growing gap between household incomes and house prices, the IMF said.

sunshine and lollipops i heard

gfresh · 10 August 2009

So they are saying prices could go up or down.. smart guys the IMF.

CamKawa · 11 August 2009

As I was saying yesterday, I was a little perplexed by the recent media property mega-spruiking.

This may be the answer.

Safe as houses

Source: Best of the ABC

MACCA350 · 11 August 2009

CamKawa said:
As I was saying yesterday, I was a little perplexed by the recent media property mega-spruiking.

This may be the answer.

Safe as houses

Source: Best of the ABC

Yep, saw that last night

cheers

Mofra · 11 August 2009

Buckeroo said:
I can see what your saying Kincella, but the tax hasn't gone up, only the property values since the latest increase in the grant. The tax has been largely static over this period (except for the increase of GST, due to the increase in the cost of new homes).

Gummints' are a cunning lot though Buckeroo - bracket creep is a phenomenon that is factored into every economic model I've seen (granted I've never had access to the kind of detailed info treasuries have).

Buckeroo · 12 August 2009

Mofra said:
Gummints' are a cunning lot though Buckeroo - bracket creep is a phenomenon that is factored into every economic model I've seen (granted I've never had access to the kind of detailed info treasuries have).

Ok, yes governments do benefit from increasing house prices (stamp duty) & some of the FHB etc goes back to the Government through GST. And even income tax bracket creep?

My point was that because the government has continued blowing up the housing bubble with handouts, house prices have escalated which in turn has made investors, real estate agents and developers richer at the expense of the young people who can't really afford the properties.

Sadly, in the end we all lose when the bubble does finally burst or house prices stagnate for the next 10 years

Cheers

gfresh · 12 August 2009

What better way to bid up the price of expensive housing than steal the money! Why didn't I think of it earlier?!

http://business.theage.com.au/business/peeters-left-reeling-by-20m-sting-20090811-egz2.html

explod · 12 August 2009

gfresh said:
What better way to bid up the price of expensive housing than steal the money! Why didn't I think of it earlier?!

http://business.theage.com.au/business/peeters-left-reeling-by-20m-sting-20090811-egz2.html

Thieving b..ch, probably following one of those shiny pants property spruikers from the other property up thread.

Notice they jawboning a stronger US dollar probably be able to up interest rates a bit and send a few more households to the cleaners over there.

Mofra · 12 August 2009

Buckeroo said:
Ok, yes governments do benefit from increasing house prices (stamp duty) & some of the FHB etc goes back to the Government through GST. And even income tax bracket creep?

I guess I should have been a bit more expansive - by bracket creep I am referring to stamp duties as there are price brackets for calculating the stamp duty that are not reset in line with rising prices, average annual incomes nor were state mortgage stamp duties abolished immediately after the introduction of the GST as they were meant to.

satanoperca · 13 August 2009

http://www.theage.com.au/national/jobless-claims-rise-50-in-southeast-20090812-eibt.html

Significant rising in unemployment in the last few months.

One trigger for a drop is underway - unemployment. Less people employed, less money being spent, greater drain on government resources
Second one - IR rates moving up is only months away.

Lets hope the government is right and the worst is behind us.

aleckara · 13 August 2009

satanoperca said:
http://www.theage.com.au/national/jobless-claims-rise-50-in-southeast-20090812-eibt.html

Significant rising in unemployment in the last few months.

One trigger for a drop is underway - unemployment. Less people employed, less money being spent, greater drain on government resources
Second one - IR rates moving up is only months away.

Lets hope the government is right and the worst is behind us.

This won't create a drop in house prices to a large extent unless everything else is falling and people are actually suffering to a large extent. As long as things are going "as normal" houses in this country can't fall, borrowers that are employed can pick up the slack if there is still a lot of demand for housing to take up the stock freed up by defaulting mortgages. "Normal" as you say is an increase in credit or borrowings as a country. We haven't really had the "deleveraging" that other developed countries have experienced hence we have seemed to gotten through the recession relatively unscathed. Economists like Keen relied on this phenomena to occur to support their theory which hasn't occured. What he didn't count on is the mass moral hazard that governments have done to bail out investments just because a lot of the older population relies on them and the jobs in this country need an increase in the amount of houses for perpetuity despite the consequences. Is there a time when the building can stop? When can we stop building houses and consuming land?

Because of governments. They have applied mass incentives to get demand for housing up as well as give banks money to keep credit flowing to houses (i.e buying mortgage securities of small banks, government guarantees, mass migration to keep locals out of the housing market etc). The poor young people of this country - really can't get a break can they since the government is making it so much harder to get a home.

Until people are forced to save and pay off their loans the housing bubble will continue. Can't have the worst behind us and have a fall in house prices.

Beej · 13 August 2009

satanoperca said:
http://www.theage.com.au/national/jobless-claims-rise-50-in-southeast-20090812-eibt.html

Significant rising in unemployment in the last few months.

One trigger for a drop is underway - unemployment. Less people employed, less money being spent, greater drain on government resources
Second one - IR rates moving up is only months away.

Lets hope the government is right and the worst is behind us.

The incorrect assumption you are making is expecting to see a significant rise in interest rates while unemployment is still rising. The worse thing the RBA might do is tick the rates up 0.5-1% tops when they think unemployment might be topping out, but until we have either rising inflation or a booming economy or both, interest rates will not reach "high " levels.

Also, even though unemployment is increasing, it is mainly due to new entrants in the work-force. The actual level of employment has been fairly constant for the past 6-9 months. Some full time jobs have gone but been replaced by part time one. Average household income has been nudged down a tiny amount by that effect, but in the meantime average full-time wages are still rising - driven mainly by the public sector at the moment though! But they still buy houses!

PS: I thought this thread was over anyway?

Cheers,

Beej

gfresh · 13 August 2009

UK outlook on interest rates..

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axScd7eCGFIU

Aug. 12 (Bloomberg) -- Bank of England Governor Mervyn King said inflation may miss the central bank’s target over the next three years, signaling investors may have to rein in expectations for interest rate increases.

King said it’s “likely” that inflation will slow below 1 percent this year and stay below the bank’s 2 percent goal until at least the end of 2012. The bank’s forecasts showed that an increase in the benchmark rate above 1 percent in the second quarter from the current record low of 0.5 percent would ensure inflation trails the target. Bond yields fell.

“The clear upshot of the bank’s inflation projections is that the market is getting ahead of itself in pricing in rate hikes over the short to medium term,” said Richard McGuire, an economist at Royal Bank of Canada in London.

US outlook on interest rates..

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGVqgVC7POF0

Officials left the benchmark interest rate between zero and 0.25 percent after their two-day meeting. The FOMC said economic conditions mean the rate will stay “exceptionally low” for an “extended period.” The decision was unanimous.

Policy makers said the economy is “likely to remain weak for a time” and projected a “gradual resumption of sustainable economic growth.” Employers cut fewer jobs last month, and the unemployment rate dropped, encouraging analysts to project an annual growth rate of at least 2 percent in the second half of 2009.

So while the some of largest 10 economies in the world keep rates low as they struggle against low growth for the forceable, RBA is still likely to be cautious in raising our rates. Maybe a little to cut some speculation, but they'll be watching the housing market once the FHOG ends, just like everybody else to see where it's going. Up -- rates may increase, flat to down - rates aren't going anywhere. So I think caution on raising rates is going to remain well until 2010.. after that, maybe this global inflation will break, but for now, looks pretty calm.

satanoperca · 13 August 2009

Beej said:
PS: I thought this thread was over anyway?

Why? Because house prices according to the ABS have shown a positive result in the last qtr out of the last four qtrs but still negative YoY.

Unemployment is still rising and the threat of IR is looming. Government & the RBA may not be in total controll of IR's given the huge amount of overseas borrowing that is needed to support our rising debt levels.
If credit dries up, it may be necessary for IR's to increase to raise funds from global sources.

And while some might believe the worst is behind us, please do not forget the huge deficit on beloved leader has racked up in the last 18 months. This will be a drag on the growth of the economy for many years to come and can only be paid back by increasing taxes, decreasing services and/or inflate it away.

CamKawa · 24 August 2009

Look what happens when gov't bribes are pulled. I wonder if house prices will suffer a similar fate.

Motor vehicle sales in sharp slowdown

House prices to keep falling for years

explod

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