House prices to keep falling for years

Soft Dough · 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

Isolated single property cases may support your argument.

But if you cared to read other posts on these forums, you would understand, through simple mathematics that if inner city housing continued to outpace outer suburb prices by percentage growth each year that

1. It would result in exponential price discrepancy difference.
2. That it would eventually result in outer suburb pricing making up the difference.

Also your post fails to highlight that not only has outer suburb pricing lost touch with proven, reliable, historical fundamentals, but so has inner city pricing.

I cannot wait to see what Kevin Rudd pulls out of his electoral purse to save the housing market this time, as no doubt, if he does not get an early election, house prices will start to fall before the next election.

I finish with this.

If there is unnatural intervention by the government into the housing market, it is going to increase prices or decrease falls... that said, if K Rudd introduces any more stimulus to housing ( and has just used $4 billion to prop up lending ) you can tell that his advice is that housing is going to fall and hence hurt his chances of re-election.

robots · 16 October 2009

hello,

hahahahaha, I WILL FINISH WITH THIS, yes sir, okay sir, no worries sir,

great commentary as usual Beej, keep it up man you are a true people's poet and we bathing in it

still 8x income, OH YEAH, 9x income next year? i hope so

for the people with $ its great having a place to live, the commoners can keep getting the use of a property, no big deal, wow Mr Burns please dont call me a name, you should of stood up to the Ex,

thankyou
Professor Robots

hello,

here it is again, reality

thankyou
professor robots

Soft Dough · 16 October 2009

robots said:
hello,

hahahahaha, I WILL FINISH WITH THIS, yes sir, okay sir, no worries sir,

great commentary as usual Beej, keep it up man you are a true people's poet and we bathing in it

still 8x income, OH YEAH, 9x income next year? i hope so

for the people with $ its great having a place to live, the commoners can keep getting to use a property, no big deal, wow Mr Burns please dont call me a name, you should of stood up to the Ex,

thankyou
Professor Robots

Another zero content quote from the master of senseless posts.

Perhaps Mr Robots would like to contribute to the discussion instead of resorting to posting nonsense designed to inflame?

I see that you have finally manned up and given us a prediction of 9x average income next year.

I would have preferred you to have given a percentage price increase instead of a multiple, due to the each way bet you have taken on what could cause the multiple to rise.

Please try to post something constructive, as my fingers are getting sore from responding to no content posts of yours with content.

I guess from now on for each content free post you reply to one of my posts with, I will reply with a copy and paste response, which in one way is very similar to what you do.

MrBurns · 16 October 2009

robots said:
Mr Burns please dont call me a name, you should of stood up to the Ex,
Professor Robots

I dont recall calling you a nme , but if you insist i can ?

robots · 16 October 2009

hello,

great, more people will get to see the truth

thankyou
Professor Robots

satanoperca · 17 October 2009

robots said:
hello,

great, more people will get to see the truth
thankyou
Professor Robots

1. You are not and more than likely will never be able to obtain the title of Professor through the diligence of study at a University.
2. House prices were falling in 2008
3. House prices gained temporary support through the FHBG and stimulatory IR rates - lowest in 50 years
4. House prices are overvalued as a multiple of household income
5. Australian households are some of the most indebted in the world
6. IR rates are and will return to normal
7. The FHBG is to be reduced again
8. Oz has high immigration
9. The majority still believe house prices cannot fall
10. There is an under supply of affordable housing
11. There is no under supply of housing
12. FHB demand has been released and bought forward in the last year
13. The lower end of the property market is going to see selling pressure in the next few years with limited buyers, buyers unwilling and unable to pay yesterday prices and more mortgagee defaults.
14. We are going to have to listen to tradies wine like little children that they are unable to maintain wages equal to surgeons - (AKA Robots early response)
15. The government needs to get its act together and allow development of more land with less red tape.
16. The bulls seem to be losing touch with reality rapidly.
17. Property moves in large cycles
18. Lending practices are still to weak
19. Government should not intervene, help and/or support the banking sector with money from taxpayers.
20. NG on existing properties does not add to the supply of homes and should be abolished.
21. NG should only be on new properties adding to the supply of housing and jobs.
22. Property does not create real wealth for society.
23. The GFC taught governments nothing and will be repeated again and again until there is major change
24. A nation focussed on innovation and efficiency instead of property is a better nation to live in.

Please add to the list or dispute what you like.

Within 6-9months the other thread will be irrelevant.

nunthewiser · 17 October 2009

Soft Dough said:
Another zero content quote from the master of senseless posts.

Perhaps Mr Robots would like to contribute to the discussion instead of resorting to posting nonsense designed to inflame?

I see that you have finally manned up and given us a prediction of 9x average income next year.

I would have preferred you to have given a percentage price increase instead of a multiple, due to the each way bet you have taken on what could cause the multiple to rise.

Please try to post something constructive, as my fingers are getting sore from responding to no content posts of yours with content.

I guess from now on for each content free post you reply to one of my posts with, I will reply with a copy and paste response, which in one way is very similar to what you do.

um seeing as this is one big zero content post

dont you find that rather hypocritical?

i do

Macquack · 17 October 2009

I like you list santanoperca, except for number 14.
Can you change it to read:

14. We are going to have to listen to tradies wine like little children that they are unable to maintain wages equal to bank clerks who also wine like little children when the air conditioning doesn't work.

Soft Dough · 17 October 2009

nunthewiser said:
um seeing as this is one big zero content post

dont you find that rather hypocritical?

i do

Of course not, there is obviously the fact that Robots is a chronic non-contributor who continually ridicules people for manning up and making predictions backed by some logic, which for example through government intervention are unmet. He will not offer a prediction of house price increases over the next twelve months, yet professes to be a competent and successful "investor"

I have just stated how I will reply to his continually non-content posts which are also immature and designed to be inflammatory.

I like to acknowledge I have actually read most posts which refer to my contributions, and believe this is the best way to respond to someone with such childish behaviour.

satanoperca · 17 October 2009

Soft Dough said:
believe this is the best way to respond to someone with such childish behaviour.

No the best way is not to respond, just ignore.

Even better respond with facts and logical arguments to represent your views.

25. Rising $AU reduces overseas demand for Australian RE.

Soft Dough · 17 October 2009

satanoperca said:
No the best way is not to respond, just ignore.

Even better respond with facts and logical arguments to represent your views.

25. Rising $AU reduces overseas demand for Australian RE.

26. Rent rises unlikely to sustain growth due to wages growth decline

27. Bank guarantee expiry may force lenders to adopt more strict lending practices and force bank margins to rise to cover increased risk.

( bit of support for 11. and 26. below )

http://www.smh.com.au/national/rent-fall-a-threeyear-first-but-rises-loom-20091016-h14p.html

satanoperca · 17 October 2009

Soft Dough, Excellent.

Lets the bulls strike back.

moXJO · 17 October 2009

Is our dollar making highs against all other currencies or just the US?

robots · 17 October 2009

hello,

28. another week of 80% clearance rate taking it to about 5mths of Superb results

please keep up the no-content posts, enjoy them

thankyou
Dr Robots

explod · 17 October 2009

robots said:
hello,

28. another week of 80% clearance rate taking it to about 5mths of Superb results

please keep up the no-content posts, enjoy them

thankyou
Dr Robots

Yep high clearance rate, many anxious sellers pleased to be getting out and dah poor sheeple brainwashed by the Fed Reserve and Krudd heading to the knackery.

Good work Robots, the hangman and professor extrordinair

WinnieBlues · 17 October 2009

does anyone who is a bull property investor worry about 'black swan' events that could drag down the value of their investment??

I have done research on mortgage resets on alt a and option arm mortgage loans resetting in the states in the next 2-3 years, with a high percentage of owners holding neg equity, in the opinion of deutche bank...

i have liquidated my one ip a while back, for a tidy gain, currently hold my ppor

i just feel that the central banks have fired all their ammo off.....and have no more remaining for any future shocks, so best to cash out while i can

i would be interested in the thoughts of other investors..cheers

robots · 17 October 2009

hello,

29. People are the happiest they have ever been:

http://www.heraldsun.com.au/news/ha...ellbeing-to-date/story-e6frf7jo-1225787300469

looks as though 8x income (oh yeah) sure is good for people by the looks of it, yeah EVERYONE HAPPY

and please stop those no-content posts

thankyou
Dr Robots

UBIQUITOUS · 17 October 2009

hello,

STOP PRESS! Australian real estate market hits new heights! : 100% clearance rate for the only auction in my street.

thank you

satanoperca · 20 October 2009

http://www.news.com.au/business/money/story/0,28323,26228564-5013951,00.html

Record-high purchase levels by first-home buyers have already started to taper down and this trend is forecast to continue, REIA president David Airey says.

"We had about 170,000 firsthome buyers in the past year - that's about 50 per cent above the usual number in the market, so I expect them to drop back to normal levels," Airey says.

So FHBG bought forward demand and historically low interest rates released pent up demand. I wouldn't expect them to drop back to normal levels but overshoot that mark.

Where is demand going to come from for the sub $500K market especially with IR's returning to normal.

Properties in this range could see sales decline but it will be a limited affect and probably not noticeable until the first quarter of next year

Limited by what exactly. Is the governuts going to come to the rescue with FHBG v2, v3, v4.

Cheers

Beej · 20 October 2009

satanoperca said:
http://www.news.com.au/business/money/story/0,28323,26228564-5013951,00.html

So FHBG bought forward demand and historically low interest rates released pent up demand. I wouldn't expect them to drop back to normal levels but overshoot that mark.

It may well over-shoot the mark - but remember we had FHB participation as low as 15% of the market during during 06/07 and the first part of 08, + highish/rising interest rates, and the market did just fine. Also remember that whatever buyer demand the grant boost/low interest rates may have brought forward (or released in terms of pent up demand), the same can be said for seller demand. Ie as buyer numbers in the sub $500K price range reduce, there may well also be less sellers, keeping supply/demand roughly in balance.

PS: I thought that was a pretty balanced article, especially considering it's from an REI.

Where is demand going to come from for the sub $500K market especially with IR's returning to normal.

Well for a start even if FHB number overshoot the average 20% mark, that will still leaves 15% say of purchasers playing in that space, so there will absolutely still be demand, just less than now - now see points above re seller demand again. The key as to whether prices rise or fall based on buyer/seller numbers in any market segment is the balance between the two.

And then if you look at the latest ABS housing finance stats here: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0, you might note that in August 09 finance for property investment loans increased by 7.6%. If that trend continues then you have the answer to your question right there (I don't know if it will or not, no-one really does!).

Limited by what exactly. Is the governuts going to come to the rescue with FHBG v2, v3, v4.

Perhaps they thinks effects will be limited by a drop off in the number of sellers plus an increase in the number of investors buying?

At the end of the day there is no question that some "heat" is going to come off the FHB market/price ranges in the next 12 months, but I'm just pointing out the factors that may well limit the effect on prices as this occurs based on available data + my past experience with the market in the early/mid 90s and also early 00s when very similar bearish arguments to now were being made.

Cheers,

Beej

House prices to keep falling for years

Soft Dough

robots

hello

Soft Dough

MrBurns

robots

hello

satanoperca

nunthewiser

Macquack

Soft Dough

satanoperca

Soft Dough

satanoperca

moXJO

menace to society

robots

hello

explod

explod

WinnieBlues

robots

hello

UBIQUITOUS

satanoperca

Beej

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