House prices to keep falling for years

[satanoperca]

Soft Dough,

I was approving of the governments actions, but modelling shows that giving the money to the people as apposed to giving it to the financiers that caused this problem gives more bang for the buck.

Unfortunately the FHBG is going to have a negative end result.

Cheers

 

[TOBAB]

The real question is how high the RBA will lift interest rates in this cycle?



thx

MS

Just had a quick look at the average income in the US. Currently $33k. Roughly half of Australia. Our tax rates are comparable (perhaps Aust slightly better in that range). I would really like to know net family income after tax and mortgage paid. I think that would answer where our property prices are headed. Because based solely on av incomes the price of property would seem about right in relative terms, infact maybe even a little low in Aust.

 

[cutz]

Just had a quick look at the average income in the US. Currently $33k. Roughly half of Australia. Our tax rates are comparable (perhaps Aust slightly better in that range). I would really like to know net family income after tax and mortgage paid. I think that would answer where our property prices are headed. Because based solely on av incomes the price of property would seem about right in relative terms, infact maybe even a little low in Aust.

Don't think so dude,

The ratio of average house price to average income has increased to ridiculous levels, especially around the inner city.

It can't be sustained, prices have to crash.

 

[TOBAB]

Don't think so dude,

The ratio of average house price to average income has increased to ridiculous levels, especially around the inner city.

It can't be sustained, prices have to crash.

I agree that prices do see extremely high. But I need some decent stats to convince me not general assertions. I think a packet of chewing gum at $1.20 is expensive when 20 years ago they were 30cents. But money doubling every 10 years means, yeah, $1.20 is about right. Inner city property has slightly more than doubled in the past 10 years. Not much though. I have bought and sold 3 places in that time so should know. With the average wage doubling also in that period, again, it woudl seem our proprty prices are in a somewhat logical place. There may be a correction, who really knows (max 15%) but a crash I severely doubt. Certainly not whilst we have all the resources we possess and a ready mkt to purchase them

 

[lukeaye]

I agree that prices do see extremely high. But I need some decent stats to convince me not general assertions. I think a packet of chewing gum at $1.20 is expensive when 20 years ago they were 30cents. But money doubling every 10 years means, yeah, $1.20 is about right. Inner city property has slightly more than doubled in the past 10 years. Not much though. I have bought and sold 3 places in that time so should know. With the average wage doubling also in that period, again, it woudl seem our proprty prices are in a somewhat logical place. There may be a correction, who really knows (max 15%) but a crash I severely doubt. Certainly not whilst we have all the resources we possess and a ready mkt to purchase them

I tend to agree with you. there is record migration occuring at the moment, and those migrants need somewhere to live. I am of the opinion that inner city apartments are undervalued. i live in brisbane, and what i was able to purchase in proximity to the city compared to other places is very very cheap. if house prices were going to crash it would have occured 1 1/2 years ago, not now.

Like anything its supply and demand, and there is virtually no supply but plenty of demand. I hear in QLD that we are 30,000 homes short a year to the demand.

The US is not like us, they have plenty of supply just no demand, because nobody has any money. everyone in aus still has money, and is spending, hence the interest rate rise.

We have first home owners grants, and all sorts of tax incentives, so why wouldnt people buy?

 

[Soft Dough]

I agree that prices do see extremely high. But I need some decent stats to convince me not general assertions. I think a packet of chewing gum at $1.20 is expensive when 20 years ago they were 30cents. But money doubling every 10 years means, yeah, $1.20 is about right. Inner city property has slightly more than doubled in the past 10 years. Not much though. I have bought and sold 3 places in that time so should know. With the average wage doubling also in that period, again, it woudl seem our proprty prices are in a somewhat logical place. There may be a correction, who really knows (max 15%) but a crash I severely doubt. Certainly not whilst we have all the resources we possess and a ready mkt to purchase them

You are not using the correct stats. You need to look at median house prices as a multiple of median income and take that into context when looking at



and understand that it is not incomes that are driving housing growth alone, but increases in gearing.

Hence why a 0.25% interest rate hike hurts a lot more now than it did previously.

Oh and I'm pretty sure that average wages have not doubled over the past 10 years, more like 60% ( ABS may 2009 vs ABS may 1999 ).

What has changed is that the 60% is being geared against more highly than in recent history at the very least.

 

[TOBAB]

Softdough I agree it is gearing that has caused price increases. My point is that the staples in life have not incerased as much as our incomes therefore we are able to take on more gearing and not be overly affected. I am talking about the middle to top end rather than the low end. Obviously low end any roi increase hurts. It is the low end where most of the % price increases have occurred in the past 6 mths, however, it is the middle to top where increases are now likely to occurr due to increases in wages, bonuses etc.

 

[Soft Dough]

Softdough I agree it is gearing that has caused price increases. My point is that the staples in life have not incerased as much as our incomes therefore we are able to take on more gearing and not be overly affected. I am talking about the middle to top end rather than the low end. Obviously low end any roi increase hurts. It is the low end where most of the % price increases have occurred in the past 6 mths, however, it is the middle to top where increases are now likely to occurr due to increases in wages, bonuses etc.

So do you think that if wages growth falls into line with inflation that there will be a corresponding fall in house prices and not just moderation to keep prices in line with their historical increases of just over inflation?

 

[TOBAB]

So do you think that if wages growth falls into line with inflation that there will be a corresponding fall in house prices and not just moderation to keep prices in line with their historical increases of just over inflation?

Inflation and measuring it - don't get me started.

If real wages growth falls, and I mean not just measured against the CPI, I mean REAL falls then housing prices will inevitably fall. And my term REAL refers to the necssities of life. When your wages can not afford a mortage and buy a square meal then that is when property prices WILL tumble.

We are a long way from that position my friend.

 

[Soft Dough]

Inflation and measuring it - don't get me started.

If real wages growth falls, and I mean not just measured against the CPI, I mean REAL falls then housing prices will inevitably fall. And my term REAL refers to the necssities of life. When your wages can not afford a mortage and buy a square meal then that is when property prices WILL tumble.

We are a long way from that position my friend.

No I said not fall, I said rise in line with inflation, and not in excess of inflation ( and imo we are there already )

Ie if gearing ratches up then return to trend should ratchet down too.

 

[explod]

hello,

looks like Knocker has departed, gee i have got 4 A4 sheets sticky taped together with all the names, just amazing

anyhow time this thread was deleted/closed, all over

thankyou
professor robots

Good idea Professor, we dont' want people getting onto the truth, keep the jawboning going, party, who cares if they cant' pay anymore, no one it seems.

Take out a couple of credit cards, pay rent for two years in advance, furnish with no more to pay for two years, get the benefits and handouts, no worries. the Professor will back you.

Yeeeeeeeeeee Haaaaaaaaaaaaaa.

The bigger the party the greater the bust. Professor, what was your thesis old Son.

 

[robots]

hello,

i didnt do a Thesis Explod, like S.Keen i was awarded an Associate Professorship for work conducted in the field of economics, (i just use the professor tag for short)

i am working on a paper at the moment which will expose the unnecessary "hype" surrounding inflation,

great fun collecting the data

thankyou
professor robots

 

[explod]

i didnt do a Thesis Explod, like S.Keen i was awarded an Associate Professorship for work conducted in the field of economics, (i just use the professor tag for short)

Well I consider it an ignorant degredation of those who achieve true scholarship. Professor is in fact senior to Associate, think you should only put up what you're entitled to.

As my old Mount Martha connection thought you were better than that.

More signs going up down here with less sale stickers. In a few years when the freeway connects it should be good pickings for those who still have a bit left.

JMHO

 

[Soft Dough]

hello,

i didnt do a Thesis Explod, like S.Keen i was awarded an Associate Professorship for work conducted in the field of economics, (i just use the professor tag for short)

i am working on a paper at the moment which will expose the unnecessary "hype" surrounding inflation,

great fun collecting the data

thankyou
professor robots

So you don't have a phd then?

 

[Glen48]

Yes he does if you want a Post Hole Dug contact the Poff.
Just don't ask any one to post facts of were migrants are buying, there is a shortage of houses, houses double every 10 yrs, China is being honest with growth because there aren't any

 

[robots]

hello,

yeah, will dig hole and will charge same rate as brain surgeon for my time, fantastic

thankyou
associate professor robots

 

[Aussiejeff]

hello,

i didnt do a Thesis Explod, like S.Keen i was awarded an Associate Professorship for work conducted in the field of economics, (i just use the professor tag for short)

i am working on a paper at the moment which will expose the unnecessary "hype" surrounding inflation,

great fun collecting the data

thankyou
professor robots

TOiLET paper, Mr Ass. Poff?

 

[satanoperca]

http://www.theage.com.au/national/seven-rate-rises-in-a-row-tipped-20091015-gz64.html

Financial markets responded by pricing in the most rapid series of interest rate rises Australia has seen for 15 years. Markets now predict that the Reserve board will raise rates at seven consecutive meetings, lifting its cash rate from 3 per cent 10 days ago to 4.75 per cent by May and 5 per cent by July

Can feel those breaks being applied as we speak.

Reduction in FHBG
Increase in IR's

The bottom end of the market will see little demand at current prices as IR's are lifted and FHBG reduced.

Lets hope those upgraders continue buying.

Robots, you need to upgrade your title to Dr as it is Dr Steven Keen, just a few more wheaties packets.

Cheers

 

[MACCA350]

hello,

yeah, will dig hole and will charge same rate as brain surgeon for my time, fantastic

So you're saying that tradies are earning more than their worth.............no doubt builders can cut some fat

cheers

 

[Soft Dough]

So you're saying that tradies are earning more than their worth.............no doubt builders can cut some fat

cheers

I guess that there is no competition required out there considering the federal government is subsidising housing prices by the geared equivalent of the FHBG, so if that was totally removed, no doubt prices would drop 50k-100k overnight.