House prices to keep falling for years

MACCA350 · 16 October 2009

Soft Dough said:
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.

I've been watching prices to build fall over the last few months already, in excess of the FHBG boost drop. So it's already happening and I'm thinking about jumping back on the fence and sitting on our land as I get the feeling they'll continue to fall.

cheers

Beej · 16 October 2009

cutz said:
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.

What makes you think inner city property prices have (or are likely to have) anything at all to do with average incomes?? Thinking like that is a big mistake if you are trying to get ahead in the real estate game....

Cheers,

Beej

Soft Dough · 16 October 2009

Beej said:
What makes you think inner city property prices have (or are likely to have) anything at all to do with average incomes?? Thinking like that is a big mistake if you are trying to get ahead in the real estate game....

Cheers,

Beej

YEAH

That's right CUTZ, don't let any logic or fundamental analysis get in the way of getting ahead in the real-estate game at the moment as the herd forgot fundamentals a long time ago

MrBurns · 16 October 2009

Soft Dough said:
YEAH

That's right CUTZ, don't let any logic or fundamental analysis get in the way of getting ahead in the real-estate game at the moment as the herd forgot fundamentals a long time ago

The more thngs change the more they remain the same, it will correct, in a big way thanks to Rudd, wait for it.

Soft Dough · 16 October 2009

MrBurns said:
The more thngs change the more they remain the same, it will correct, in a big way thanks to Rudd, wait for it.

Exactly, the pseudo-ponzi scheme now REQUIRES people to abandon fundamentals to keep afloat ( as well as relying on government handouts and therefore disrespecting of market forces )

Beej · 16 October 2009

Soft Dough said:
YEAH

That's right CUTZ, don't let any logic or fundamental analysis get in the way of getting ahead in the real-estate game at the moment as the herd forgot fundamentals a long time ago

MrBurns said:
The more thngs change the more they remain the same, it will correct, in a big way thanks to Rudd, wait for it.

Soft Dough said:
Exactly, the pseudo-ponzi scheme now REQUIRES people to abandon fundamentals to keep afloat ( as well as relying on government handouts and therefore disrespecting of market forces )

Complete load of rubbish. If you are talking city-wide or national average/median property prices then your argument about what you call "fundamentals" might carry some weight, although you are still misguided expecting a big crash as ultimately the issue will be solved with increased supply through building and decentralisation of the population (like in the US), but anyhoooo.....

Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.

In fact the "correction" in inner city property prices in Sydney at least has already happened! Late last year/early this year in the depths of the GFC, property in the inner city was changing hands for up to 20% lower prices than a year earlier. Prices are now back to where they were in late 2007, and still rising. If you didn't see what was going on then, you missed the opportunity - the "correction" in the inner city has been and gone.

Cheers,

Beej

MrBurns · 16 October 2009

Beej said:
Complete load of rubbish. If you are talking city-wide or national average/median property prices then your argument about what you call "fundamentals" might carry some weight, although you are still misguided expecting a big crash as ultimately the issue will be solved with increased supply through building and decentralisation of the population (like in the US), but anyhoooo.....

Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.

In fact the "correction" in inner city property prices in Sydney at least has already happened! Late last year/early this year in the depths of the GFC, property in the inner city was changing hands for up to 20% lower prices than a year earlier. Prices are now back to where they were in late 2007, and still rising. If you didn't see what was going on then, you missed the opportunity - the "correction" in the inner city has been and gone.

Cheers,

Beej

You are single handedly obsessed with propping up the housing market. You dont see the reality of whats going on, I dont know how old you are but it sounds like you didnt see it happen in the past, this market is so distorted and bloated by meddling from Canberra it's now in a very precarious situation or rather all the FHB who were sucked in recently are in particular in a very bad situation.

How many of your wealthier people will continue to support these prices once the market gets the shakes ? Very few.

Beej · 16 October 2009

MrBurns said:
You are single handedly obsessed with propping up the housing market. You dont see the reality of whats going on, I dont know how old you are but it sounds like you didnt see it happen in the past, this market is so distorted and bloated by meddling from Canberra it's now in a very precarious situation or rather all the FHB who were sucked in recently are in particular in a very bad situation.

How many of your wealthier people will continue to support these prices once the market gets the shakes ? Very few.

As usual simply a BS post full of one-eyed political ranting and devoid of any actual facts or rational argument to back up your point. Are my arguments simply too compelling for you to actually refute in any rational way? Why do you think inner city and beach side property costs so much more than elsewhere exactly? Did you miss the correction last year that has already been and gone?

Beej

trainspotter · 16 October 2009

Bang a gong .... bring it on ! "If we were prepared to cut rates rapidly, to a very low level, in response to a threat but then were too timid to lessen that stimulus in a timely way when the threat had passed, we would have a bias in our monetary policy framework," RBA Governor Mr Stevens said in prepared remarks. Oooooooooooopsss ......... here comes the pain.

But wait there is more ! ONE quarter of 1 per cent may not sound like much, but for Sonja and Arjen van den Bosch it represents $167 a month extra that they will have to find to pay their $800,000 mortgage.

The couple live in Coogee, in Sydney's east, with their two-year-old twins, and are willing to manage the burden of very large interest payments in return for a beautiful home and a beachside lifestyle, The Australian reports.

But the prospect of further interest rate rises concerns the family, who have already significantly reined in their spending habits.The family took out a substantial mortgage in 2005 when they bought two unrenovated duplexes for $1.6 million.

But financial stresses soon followed when their budget for renovating the two properties blew out. At one point the family's mortgage was as high as $2 million. They sold one of the duplexes in 2007 at a $100,000 net loss.

Thank you goes to "The Australian" for this tidbit of info. Gosh ... reality is setting in?

Mc Gusto · 16 October 2009

Beej said:
Complete load of rubbish. If you are talking city-wide or national average/median property prices then your argument about what you call "fundamentals" might carry some weight, although you are still misguided expecting a big crash as ultimately the issue will be solved with increased supply through building and decentralisation of the population (like in the US), but anyhoooo.....

Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.

In fact the "correction" in inner city property prices in Sydney at least has already happened! Late last year/early this year in the depths of the GFC, property in the inner city was changing hands for up to 20% lower prices than a year earlier. Prices are now back to where they were in late 2007, and still rising. If you didn't see what was going on then, you missed the opportunity - the "correction" in the inner city has been and gone.

Cheers,

Beej

Can't agree with the correction comment. If it did correct then why is it back? In truth it began to correct but the gvt interfered. anyone can see that. the question of whether it holds at the same levels is the contentious one.
I personally think it will go back to where it was in the 'correction' period. Not a crash by any means. Interest rates will have an impact, further unemployment and a slow down of stimulus will have an effect and a dent to confidence in the macro community will have an impact. Australia and the world has a while to go yet. We are far from out of the woods.

Thanks

Gusto

explod · 16 October 2009

Beej

Seeing as you are all failing to see my point, which is actually about a true market fundamental, and that is simply that the people who buy property in the inner city, near beaches etc (which has finite supply and ever growing relative demand), are the higher income earning and wealthier people in a particular city. A $1M house might seem expensive to someone on $60k, but if you are on $150k-$200k (or maybe a couple with $150k + $100k household income) then it's not that hard to save a big deposit (which you probably already have), buy the $1M place, and pay it off in a few years. Unless the stratification of incomes changes in our big cities (ie high income earners stop earning high incomes!), this will not change.

And the big money earners are losing jobs at an increasing rate, particularly finance, leasure industry, manufacture and yes building and construction. The other is that many semi and retired have had super portfolio values reduce by 30% overall (and the financials say that more losses will come soon). The real shift that commenced with the October crash of 08 has not worked its way through the whole system yet, held back to some degree by the stimulous and some empty jawboing.

If you only focus your fundamantal analysis on the property side of the ledger you may just find things not so good for you in the longer term.

We are only trying to help, the idea of hype and cheeriness for success is fine, but one needs to keep an eye on and understand possible downsides. The US are learning that hard and fast, and in spite of Chindia and immigration we may not be immune. The great depression taught us that and history like human nature will repeat the mistakes.

Beej · 16 October 2009

explod said:
And the big money earners are losing jobs at an increasing rate, particularly finance, leasure industry, manufacture and yes building and construction.

Are they really? Are you so sure about that? I'm pretty broadly plugged in for various reasons and that's not what I see. Last year there were a few hiccups in the financial services industry, but everyone I know who lost a job last year in those area's found one again and in all cases are earning more now than they were before..... People are making quite a bit out of the stock market at the moment as well, the banks are all doing well and hiring in many area's (not just not firing) and so on.

I don't think there are many unemployed tradies around Sydney at least right now either. As for tourism/leisure industry, that's actually not that high a paying sector down here really, and manufacturing doesn't tend to be a big driver of inner city property either. It's financial services, business owners, executives, medical professionals, lawyers, IT and other professionals that are the main buyers in Sydney inner city.

The other is that many semi and retired have had super portfolio values reduce by 30% overall (and the financials say that more losses will come soon). The real shift that commenced with the October crash of 08 has not worked its way through the whole system yet, held back to some degree by the stimulus and some empty jawboing.

But how do you see that impacting Sydney/Melbourne inner city property prices? If anything it could cause a "flight to safety" as those very same super portfolio holders swear off a heavy equity bias in their super and instead shift more of it towards "bricks and mortar" for security of capital value and income stream? Also many of them have done extremely will since the March stock market lows as well.

If you only focus your fundamantal analysis on the property side of the ledger you may just find things not so good for you in the longer term.

We are only trying to help, the idea of hype and cheeriness for success is fine, but one needs to keep an eye on and understand possible downsides. The US are learning that hard and fast, and in spite of Chindia and immigration we may not be immune. The great depression taught us that and history like human nature will repeat the mistakes.

Of course, but the level of mis-placed pessimism that has been shown in this thread over the past 18 months, plus the fact that it proved to be pretty much completely wrong, suggests that the same statement could be made the other way around as well!

Cheers,

Beej

satanoperca · 16 October 2009

Beej said:
Also many of them have done extremely will since the March stock market lows as well.

This statement is only true if they sold at or around the peak and picked the bottom in March. Many are just getting back to break even on the share market, some have made some $$$ and some are still negative.

It fanatastic that many took flight into property in the last year with low interest rates and freebees, thus holding up the demand for the time being. I do wonder how many will then flee when they see prices stagnate or decline.

With all those FHB and those investors coming into the market, who will be the buyers in the next year as interest rates return to normal in a market saturated with debt.

With a rising $AU, property in Australia becomes less attractive to overseas investors. This was hearld as another reason why property would boom, not if the dollar keeps going up.

Stuff the fundamentals, just go with the flow, it will work out.

explod · 16 October 2009

Ya know Beej, this thread is really the wrong one for you, and you obviously know little of the real financial fundamentals. There is a good U tube post put up by Kennas on the Gold Thread overnight. Objectively have a soak of all that, and if you think the same thing is not gradually happening in Australia, then you are beyond help.

cheers explod

I am am prepared, but have done well out of property in the past.

Beej · 16 October 2009

explod said:
Ya know Beej, this thread is really the wrong one for you, and you obviously know little of the real financial fundamentals. There is a good U tube post put up by Kennas on the Gold Thread overnight. Objectively have a soak of all that, and if you think the same thing is not gradually happening in Australia, then you are beyond help.

cheers explod

I am am prepared, but have done well out of property in the past.

Look I'll be honest and tell you that I think people that think they truly know anything about financial fundamentals based on YouTube video's off the internet are probably the ones actually lacking in true knowledge/understanding

Beej

explod · 16 October 2009

Beej said:
Look I'll be honest and tell you that I think people that think they truly know anything about financial fundamentals based on YouTube video's off the internet are probably the ones actually lacking in true knowledge/understanding

Beej

I have had a number of financial advisors in the past, have read very many books by authors worldwide on financial fundamentals and have been an investor speculator for more than 40 years. If you are wiser (and learning does not make real wisdom, experience and i.q are the only things that can do that) then I take my hat off to you and dont' look at the u tube (it is actually a business documentary being circulated that way) think it was CNBC. So play your make believe and I'll get back to my trading, up 125% this month, does not happen all the time, but a good one this month indeed.

MrBurns · 16 October 2009

Beej said:
As usual simply a BS post full of one-eyed political ranting and devoid of any actual facts or rational argument to back up your point. Are my arguments simply too compelling for you to actually refute in any rational way? Why do you think inner city and beach side property costs so much more than elsewhere exactly? Did you miss the correction last year that has already been and gone?
Beej

No actually all your posts are full of BS facts contrived by you in your obsessive quest to single handedly hold up the property market, you are breathtakingly transparent in your one sided lies and distortions.

Your arguments are too compelling ?????????? I have to be careful not to spontaneously spew, you are an arrogant balloon full of ****.

explod · 16 October 2009

MrBurns said:
No actually all your posts are full of BS facts contrived by you in your obsessive quest to single handedly hold up the property market, you are breathtakingly transparent in your one sided lies and distortions.

Your arguments are too compelling ?????????? I have to be careful not to spontaneously spew, you are an arrogant balloon full of ****.

Mr Burns, an unbelievable waste as my post is too. He is on the wrong thead and does not seem know it.

But well said

Back on topic, investing in property can be a very good thing, but now is suicide if you like money, qualification, my own opinion: do your own research

MrBurns · 16 October 2009

explod said:
Mr Burns, an unbelievable waste as my post is too. He is on the wrong thead and does not seem know it.

But well said

Back on topic, investing in property can be a very good thing, but now is suicide if you like money, qualification, my own opinion: do your own research

As I've always said, property is great, my preferred way to go but to say it always goes up and has no dangers is fools advice and to not admit we are in a serious bubble is just the opinion of the witless.

freebird54 · 16 October 2009

ANYONE seen this yet?

The Housing Collapse of 2010 Will Be Worse Than 2008

http://www.youtube.com/watch?v=kunB4SnAh4g&NR=1

House prices to keep falling for years

explod

explod

explod

explod

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