House prices to keep falling for years

[numbercruncher]

hello,

still having trouble finding something on australia the greatest country in the world,

thankyou
robots

Not looking to hard then are we Robi !!

One eyed permabulls being roasted all across this fine nation, just go ask your mate Jim Raptis and many of his Ilk that are being sucked down the vortex of " prices just dont rise forever " .....

Happy days !

 

[robots]

hello,

surely the holy bible (ABS) must have something number?

still a bit embarrassing to post I guess

thankyou
robots

 

[pepperoni]

NY Times abandons the sinking "property to rise forever" ship.

Must be getting pretty lonely on there?


GUANGZHOU, China ”” China has joined the United States, Britain, Spain and others on the list of nations suffering a real estate decline.
Skip to next paragraph
The New York Times

Although the last national statistics showed single-digit growth from July 2007 to July 2008 in the average price of commercial and residential real estate, real estate brokers say prices are down from peaks reached earlier this year, while the number of transactions has plunged.

This downturn comes as the growth rate of Chinese exports has slowed ”” sharply in yuan terms ”” and stock markets have plummeted. The confluence of events has resulted in what economists describe as a deceleration in China’s economic growth ”” although at nearly 10 percent it remains the envy of many nations.

Brokers say that sales volumes first dropped precipitously here in southeastern China, and then the decline spread across the country. Faced with few buyers, sellers started cutting their prices for residential and commercial real estate.

In some neighborhoods in the southeast, prices have dropped by 10 to 40 percent.

In other parts of the country, transactions have fallen, but prices have only started to follow. For instance, the number of home sales has plunged by two-thirds in Harbin in the northeast, though prices are down as little as 4 percent from the same period last year.

“People are thinking more carefully and taking much longer before they decide to buy or not to buy property,” said Hwang Sha, a real estate broker in Xiamen in east-central China.

Cities deep in China’s interior are least affected. Dan Yian, a real estate agent in Chongqing, the largest city in southwestern China, said that the volume of housing transactions there had slowed by 20 to 30 percent so far this year. But prices have not yet fallen from a stable level of $730 a square meter, or 10.76 square feet, which works out to nearly $66,000 for a typical apartment of about 970 square feet.

Export-dependent coastal cities in mainland China have had the steepest downturns in their real estate markets. Some of those problems are starting to make ripples elsewhere in Asia.

Freddy Wu, the chief executive of Hong Kong Property Services, said his real estate agency had seen mainland investors default in recent months on a tenth of their purchases of Hong Kong apartments, forfeiting the down payments that they made.

“A lot of investors from China have their cash tied up in the mainland stock market and in mainland real estate, so they would rather take a loss now,” instead of being forced to sell mainland investments at a loss to come up with the cash to complete purchases in Hong Kong, Mr. Wu said.

The skylines of Chinese cities remain dotted with cranes. But Ralph J. Gerson, the executive vice president of Guardian Industries, the largest American glass-making company and the world’s third-largest, said that demand was rising less rapidly in China for the company’s high-tech insulated glass for modern office buildings.

“It used to be booming, and now it’s growing at a slower pace,” he said. Fresh evidence of broader economic problems in China came on Wednesday as the government released monthly statistics. Growth in imports and in fixed-asset investments slowed. Inflation dropped sharply at the consumer level, to 4.9 percent in August from 6.3 percent in July.

But unlike the subprime meltdown in the United States, and the resulting credit crisis, weaknesses in China’s real estate market do not at this point appear to pose a threat to the vitality or stability of the financial system.

One reason is that Chinese banks require down payments of at least 30 percent, giving banks an ample cushion of cash against losses. American banks frequently did not require down payments. Foreclosures are also rare here, and many Chinese still pay cash for their homes, particularly in rural areas.

Leo Wah, a Chinese banking analyst for Moody’s, said that Chinese banks could weather the decline in real estate prices, but cautioned that they could face more challenges if economic troubles spread.

“We do not believe that it would cause a serious problem, but if property prices fall some more, it won’t be the only sector that has problems,” he said.
Real estate difficulties pose a dilemma for China’s leaders because they coincide with a two-thirds drop in share prices on the Shanghai stock market since the market’s high last October. The two together could produce a negative effect, causing Chinese consumers to feel poorer and to reduce spending.

The most recent national data from the government shows that the average price for all residential and commercial real estate was 7 percent higher in July than a year earlier. But brokers across China say that within that period, prices peaked in many markets ”” either at the end of last year or at various times this year ”” and have slid since. The stocks of real estate developers have plunged, too. China Vanke, the country’s biggest publicly traded developer, reported on Tuesday that its sales had plummeted in August by 35 percent from a year earlier.

The real estate decline is affecting ordinary Chinese, too. Perhaps most consequential is the emerging view, apparent on blogs and in interviews, that apartments and houses, like shares on the declining Shanghai stock market, are no longer a certain path to prosperity.

Lin Bin, a 48-year-old insurance saleswoman who lives in Guangzhou, said the 1,000-square-foot, three-bedroom apartment she bought here in 2002 was still worth more than she paid in 2002. But she said she had lost two-thirds of the $4,400 she put into the stock market a year ago and worried that the housing market might be next.

“I’m not contemplating buying a second home as an investment because I hear that stock market and housing prices will continue to fall through next year,” she said while shopping recently.

Part of the problem is a severe credit squeeze. Through last winter, China’s central bank repeatedly raised the amount of capital it required Chinese commercial banks to deposit with it. The goal was to slow bank lending and control inflation. The commercial banks responded by continuing to lend to big corporate customers, most of them state-owned or at least state-controlled, while reining in other lending.

Central bank data shows that total loans to households plummeted by a third from March to July of this year. The bulk of these loans are mortgages because Chinese shoppers, even car buyers, use mostly cash.

“It’s collapsing; it’s unbelievable, and most of it is from mortgages ”” I don’t see how the housing sector is going at all,” said Nicholas R. Lardy, a specialist in Chinese finance at the Peterson Institute for International Economics in Washington.

He added that the decline was so precipitous that it had to reflect weaker demand for housing, and not just regulatory restrictions on credit.

To increase lending may be difficult now. The central bank needs ever greater reserves from commercial banks to buy dollars and prevent China’s currency from rising against the dollar, which could cause China’s exports to slow further.

China’s trade surplus set a record of $28.7 billion in August, the government announced on Wednesday, mainly because of an unexpected slowdown in the growth of imports. Slower growth of imports is a common sign of a weakening economy.

Assessing national trends in Chinese real estate is often difficult because of long lags in the data. Real estate brokers say prices are holding up better for homes in prime locations than in outlying areas. Top-quality commercial buildings are faring better than older buildings.

 

[gfresh]

Noosa.. sunshine coast, gold coast all down "on average" via REIQ figures robots, as posted here.

You can live in denial all you like, but prices are coming down somewhat. Many "price reduced", "urgent sales" listed as well indicating buyers are starting to lower their prices.

No crash yet, but these things don't happen over night. They didn't in the UK or the US. May not be the worst for another 6-12 months. May not happen at all, granted. Can only watch and observe the signs, see what happens.

 

[robots]

hello,

is this the one from REIQ:

http://www.reiq.com.au/MediaReleases/view_media.asp?media_id=442

will have a look around at reiq

thankyou
robots

 

[gfresh]

Well, that is their spin article.. These are the figures for the goldcoast, although doesn't mean much without volumes:

http://www.goldcoast.com.au/article/2008/09/09/16013_news.html

This also shows some falls are taking place in other markets: http://www.rpdata.net.au/news/rp/20080901_media.html. Looks like Melbourne is pretty steady however, lucky you.

 

[jeflin]

Noosa.. sunshine coast, gold coast all down "on average" via REIQ figures robots, as posted here.

You can live in denial all you like, but prices are coming down somewhat. Many "price reduced", "urgent sales" listed as well indicating buyers are starting to lower their prices.

No crash yet, but these things don't happen over night. They didn't in the UK or the US. May not be the worst for another 6-12 months. May not happen at all, granted. Can only watch and observe the signs, see what happens.

Currently most of the damage is in the US market but we can see economic slow down and credit problems slowly surfacing around the world (esp. Europe and Asia).

I think we will experience the brunt of depression in 2009 and the malaise drag its way till 2010 before we see a glimmer of hope.

 

[wayneL]

UK top ten property price cuts (so far):

http://timesbusiness.typepad.com/money_weblog/2008/09/post.html

1. Point Gribben, St Austell, South Cornwall

Was: £725,000 Now: £499,500 Price cut: 31.7 per cent

Point Gribben (above) has apparently only ever been occupied by “a lady and her maid” and a “childless couple”, although confusingly, the agent refers to it as a “gentleman’s residence”. Whoever is destined to live in the massive five-bedroomed house, stuffed-full with period features, will be pleased to hear that £225,500 has been cut from the asking price. It has stained-glass windows, a scattering of period fireplaces, deep sprocketed eaves and a generous amount of oak panelling and oak staircases. It is certainly not for buyers with minimalist aspirations. Estate agent: Lillicrap Chilcott

 

[nat]

ive been keeping an eye on real estate .com on sunshine coast prices and i dont see them falling yet, if a slightly cheaper then normal house appears it is snapped up within days, may hold up better then a lot of other places around australia,ive been waiting for prices to drop $50000 to $100000 but to many otheres waiting to. Mainly looking warana to caloundra area .

that could all change still , Nathan

 

[tronic72]

Here they go....

With the recent collapses of the so many banks, we'll start to see the property prices drop. It won't be an instant crash but a "slow motion train wreak" Putting my property on the market in the next month and will sit and wait for the next 12 months. My reasoning for this:

China/India - China has been living off the west for the past 5 years. The west is fast running out of money. Literally trillions of dollars have disappeared from the worlds economy is the last 12 months.

USA - Is in recession. How many more banks will tumble? It's reasonable to expect the collaps of Lehman (and AIG) will almost certainly bring more banks on the edge, over the edge. The US has said "no more". They won't bail out anymore companies.

Europe - Property prices in the UK are tumbling

AU - We've been riding on the back of the mining truck and with China's decline in commodities use. We'll feel the pinch big time.

$200,000 will soon be worth what $500,000 was worth.

 

[Gspot]

Here they go....

With the recent collapses of the so many banks, we'll start to see the property prices drop. It won't be an instant crash but a "slow motion train wreak" Putting my property on the market in the next month and will sit and wait for the next 12 months. My reasoning for this:

China/India - China has been living off the west for the past 5 years. The west is fast running out of money. Literally trillions of dollars have disappeared from the worlds economy is the last 12 months.

USA - Is in recession. How many more banks will tumble? It's reasonable to expect the collaps of Lehman (and AIG) will almost certainly bring more banks on the edge, over the edge. The US has said "no more". They won't bail out anymore companies.

Europe - Property prices in the UK are tumbling

AU - We've been riding on the back of the mining truck and with China's decline in commodities use. We'll feel the pinch big time.

$200,000 will soon be worth what $500,000 was worth.

I've just read a report, that says 90% of China's GDP is within China. And if you ask the big miners who have more knowledge than any of us, of whats really going on, they don't believe their will be a decline in commodities use.
Also with a recession, cheap made from china products are all that the americans can afford.
Meaning we won't fall like other countries, because we really are 'the lucky country'.
Now shoot me down, boys!

 

[pepperoni]

Here they go....

With the recent collapses of the so many banks, we'll start to see the property prices drop. It won't be an instant crash but a "slow motion train wreak" Putting my property on the market in the next month and will sit and wait for the next 12 months. My reasoning for this:

China/India - China has been living off the west for the past 5 years. The west is fast running out of money. Literally trillions of dollars have disappeared from the worlds economy is the last 12 months.

USA - Is in recession. How many more banks will tumble? It's reasonable to expect the collaps of Lehman (and AIG) will almost certainly bring more banks on the edge, over the edge. The US has said "no more". They won't bail out anymore companies.

Europe - Property prices in the UK are tumbling

AU - We've been riding on the back of the mining truck and with China's decline in commodities use. We'll feel the pinch big time.

$200,000 will soon be worth what $500,000 was worth.

Agree, and would add the potential for china to export inflation, and us to import it with our 80c dollar!

And oil heading for $80 doesnt seem to be helping one bit.

But IMO you left it too late to try to sell your house ... In the best bits of sydney at least regular and reasonable sales are a distant memory.

You may be lucky if you are in a "slow on the uptake" area ... particulary the ones that missed the first year or 2 of the property boom hysteria. They tend to do a deer in the headlights at HUGE market signals for months and months

Id hold, pay off loans and wait for some solid upward momentum before selling, or buying shares for that matter.

 

[Hagtwoeight]

Here they go....

With the recent collapses of the so many banks, we'll start to see the property prices drop. It won't be an instant crash but a "slow motion train wreak" Putting my property on the market in the next month and will sit and wait for the next 12 months. ...

$200,000 will soon be worth what $500,000 was worth.

Pretty much my thinking and my house went on the market last week.
Fingers crossed that people stay oblivious to what may be about to fall upon us.

 

[N1Spec]

ok so whats the ASF concensus here for Aus house prices? we know the US is up shiet creek, heck its what caused this meltdown in the 1st place.

im actually one of the rare ones looking for a residential property(to live in), my logic is that were not immune. Was gonna dip my toes in later this year but will probably put it off till late 2009.

One thing i notice is prices in the RE websites such as realestate.com does not reflect the true state of the market. Some of those listings have been there for months i mean like over 6 months with the price staying the same?? does that make sense??

Cheers

 

[Beej]

ok so whats the ASF concensus here for Aus house prices? we know the US is up shiet creek, heck its what caused this meltdown in the 1st place.

Very hard to tell as there are raging differences of opinion (and data!) on this one!

im actually one of the rare ones looking for a residential property(to live in), my logic is that were not immune. Was gonna dip my toes in later this year but will probably put it off till late 2009.

You are not so rare! There are probably at least a million people just like you out there in the same position as well. Hanging out until next year is not a bad idea in the current market, especially if you keep saving. However, I would also watch the market closely to see what happens as interest rates come off. Be ready to buy if you find the right house at a price you are happy with. Also depends on the area in Australia in which you live and the price range you are looking at to a very large extent as well.

One thing i notice is prices in the RE websites such as realestate.com does not reflect the true state of the market. Some of those listings have been there for months i mean like over 6 months with the price staying the same?? does that make sense??

This is often the case, even in strong markets, but more so in a soft market. Properties that are not correctly priced will hang around for ages - those priced correctly for the market and owned by a motivated vendor will sell fairly quickly. Others will appear, and then disappear rather than hanging around, but the owners decide to hang on them.

Cheers,

Beej

 

[robots]

ok so whats the ASF concensus here for Aus house prices? we know the US is up shiet creek, heck its what caused this meltdown in the 1st place.

im actually one of the rare ones looking for a residential property(to live in), my logic is that were not immune. Was gonna dip my toes in later this year but will probably put it off till late 2009.

One thing i notice is prices in the RE websites such as realestate.com does not reflect the true state of the market. Some of those listings have been there for months i mean like over 6 months with the price staying the same?? does that make sense??

Cheers

hello,

jump in bro if going to live in it, pay P & I, and before you know it off she goes,

you wont regret it when you hitting 55+ and you know the roof is over you're head, and you have all the time in the world to walk the street or travel the world

thankyou
robots

 

[pepperoni]

Very hard to tell as there are raging differences of opinion (and data!) on this one!

Really? I cant fathom any such raging difference.

The majority of people see that the fortunes of:

(a) the huge numbers of highly leveraged buyers and

(b) the various sources of these funds,

were, are, and will continue to be strongly linked.

These people are now paying increasing attention to the spot of bother of a few bit players like Fannie, Freddie, Bear, Lehman etc.

Any competing view is limited to those of single figure IQs, the clinically insane, and tin foil hat wearers. We saw them laughed off insight on SBS last week ... not may people stupid enough to buy into that cr@p anymore

Not many things in this world exist in a vaccum.

There are probably at least a million people just like you out there in the same position as well.

Do you believe this sort of stuff? And do you realise that even if there were 20 million people out there waiting on the sidelines that prices are and will be capped out by what people are physically able to pay. Have you read we have been reached and past that point for a few years now??

As in the old saying "money does not grow on trees".

 

[YChromozome]

ok so whats the ASF concensus here for Aus house prices? we know the US is up shiet creek, heck its what caused this meltdown in the 1st place.

The cause is speculation funded by debt.

The speculative bubble for housing in Australia is bigger than the US or UK. In terms of the number of wage years to buy a house, Australia is leading.

Unfortunately all this speculation and huge price increases had to come from somewhere. After all wages were not rising at the same rate, the key to why house prices don't increase every 7 to 10 years.

In terms of Household debt to disposable income, Australians now have 160 cents in the dollar of debt, vs the USAs 130 cents at the top of their boom. Australia's household debt has been accelerating much faster than the US. Debt is now double what it was in the lead up to the Great Depression.

 

[Beej]

Really? I cant fathom any such raging difference.

Holy BS batman - have you actually been reading this thread???? It's full violent agreement then is it???

Any competing view is limited to those of single figure IQs, the clinically insane, and tin foil hat wearers. We saw them laughed off insight on SBS last week ... not may people stupid enough to buy into that cr@p anymore

Well there is still plenty of evidence to the contrary - see last weekend auction clearances, see the *actual* house price statistics. You're proclaiming "victory" in the argument and attacking those of us with differing opinions on the basis of a 2.5% fall in median house prices nationally??? A soft market does not a housing crash make... we are NOT the US and we are NOT the UK. We do not have the credit rationing and over supply issues being faced in the US and the UK. We've had all these arguments before.....

Do you believe this sort of stuff? And do you realise that even if there were 20 million people out there waiting on the sidelines that prices are and will be capped out by what people are physically able to pay. Have you read we have been reached and past that point for a few years now??

Do YOU actually believe that most people in AU don't desire to own their own homes!!???? That everyone would be happy to be at the mercy of their land-lord forever??? Just because YOU feel that way does not mean that the majority of people think the same - the opposite is in fact the case.

And PS: I'm simply arguing against the price *crash* scenario.... I don't believe that will happen.

As for the capacity to pay argument, well if prices are flat to slightly lower now, and interest rates are lower, then surely capacity to pay has INCREASED for everyone?? If large numbers could afford to buy in the last few years, then why couldn't they afford to now? Your argument does not make sense, and is not backed up by what actually happens out there - you should have been at the auctions I was at last Saturday! Buyers everywhere bidding each up like crazy - why? Because they WANTED the houses that were for sale - personal and lifestyle factors motivate buyers of residential property much more than fears about short term price movements.

So what is YOUR advice to the original question then? The guy said he WANTS to buy his own home.... what should he do in your view??? Keep paying ever increasing rent while earning an ever diminishing return on his cash as interest rates fall and the tax man takes his chunk? What else can he do - invest the surplus in the stock markets?? LOL! You seem to think everyone in AU is just going to put their lives and aspirations on hold in order to make the "dream" of a house price crash come true just just for your benefit???

Cheers,

Beej

 

[pepperoni]

Holy BS batman - have you actually been reading this thread???? It's full violent agreement then is it???



Well there is still plenty of evidence to the contrary - see last weekend auction clearances, see the *actual* house price statistics. You're proclaiming "victory" in the argument and attacking those of us with differing opinions on the basis of a 2.5% fall in median house prices nationally??? A soft market does not a housing crash make... we are NOT the US and we are NOT the UK. We do not have the credit rationing and over supply issues being faced in the US and the UK. We've had all these arguments before.....



Do YOU actually believe that most people in AU don't desire to own their own homes!!???? That everyone would be happy to be at the mercy of their land-lord forever??? Just because YOU feel that way does not mean that the majority of people think the same - the opposite is in fact the case.

And PS: I'm simply arguing against the price *crash* scenario.... I don't believe that will happen.

As for the capacity to pay argument, well if prices are flat to slightly lower now, and interest rates are lower, then surely capacity to pay has INCREASED for everyone?? If large numbers could afford to buy in the last few years, then why couldn't they afford to now? Your argument does not make sense, and is not backed up by what actually happens out there - you should have been at the auctions I was at last Saturday! Buyers everywhere bidding each up like crazy - why? Because they WANTED the houses that were for sale - personal and lifestyle factors motivate buyers of residential property much more than fears about short term price movements.

So what is YOUR advice to the original question then? The guy said he WANTS to buy his own home.... what should he do in your view??? Keep paying ever increasing rent while earning an ever diminishing return on his cash as interest rates fall and the tax man takes his chunk? What else can he do - invest the surplus in the stock markets?? LOL! You seem to think everyone in AU is just going to put their lives and aspirations on hold in order to make the "dream" of a house price crash come true just just for your benefit???

Cheers,

Beej

Congratulations - Every point in this post is 100% incorrect, apart from "we are not the US" which is plain kooky.

I wont bother debating the relevance on clearance rates lower than last year on lower volumes. And Im not aware of "opinions" on the house fall statistics ... the facts speak for themselves.

But if you reread the thread you will find that it covers all of your points. In doing so you will notice that the intelligible posts are all in violent agreement. Coincidence?

And I didnt give advice to the question, nor should you until you understand:

- for the second time that money does not grow on trees; and
- that "supply and demand" is a quick way to say "demand AT A PRICE and supply AT A PRICE";
- as your PM said in parliament today, "we are not immune" from events in the US and UK.