House prices to keep falling for years

[Beej]

The gulf between what's happening in the market place and the views of the permabulls in this thread is amazing.

Do you see me as a "permabull"?? (Which by the way I don't think I am if you actually read what I write - I merely disagree with the contention that we are heading for a long term crash/decline in property prices).

If yes, care to show me what is actually hapenning in the maket place then? I've been posting consistenly links that show what IS actually happening in the market place (in Sydney at least), so I am curious to see if/how your information can differ from those facts??

Cheers,

Beej

 

[robots]

hello,

<deleted>

we all still waiting on the ABS data, the last quarter showed a great result considering the shock exchange, and "maybe" people will be surprised again come next quarter results,

thankyou
robots

 

[pepperoni]

hello,

<deleted>

we all still waiting on the ABS data, the last quarter showed a great result considering the shock exchange, and "maybe" people will be surprised again come next quarter results,

thankyou
robots

Im not waiting on any data - Ive seen the falls and discounting in the market.

Esp given that last quarter showed something like a 9% annualised fall in syd and things are clearly worse now.

Ive been happy enough with the market to want to buy all year ... right now its a pure buyers market Id snap up the right house at the sort of prices Im seeing.

I think its more the permabulls looking for the one bit of hope amongst all the other clearly negative signs.

For me its of marginally more interest than Beej posting the 1 or 2 sales inner north sales from homepriceguide when there are 200-300 houses languishing on the market.

 

[Pommiegranite]

Im not waiting on any data - Ive seen the falls and discounting in the market.

Esp given that last quarter showed something like a 9% annualised fall in syd and things are clearly worse now.

Ive been happy enough with the market to want to buy all year ... right now its a pure buyers market Id snap up the right house at the sort of prices Im seeing.

I think its more the permabulls looking for the one bit of hope amongst all the other clearly negative signs.

For me its of marginally more interest than Beej posting the 1 or 2 sales inner north sales from homepriceguide when there are 200-300 houses languishing on the market.

Pepperoni, why would you want to buy 'at the sort of prices which you are seeing'? Are you saying that prices won't go lower than what you are seeing?

In my opinion, house price falls are just beginning to gain momentum i.e the shift from denial to panic. Once this happens, nearly all prosepctive buyers begin to hold off.

 

[Beej]

For me its of marginally more interest than Beej posting the 1 or 2 sales inner north sales from homepriceguide when there are 200-300 houses languishing on the market.

One or two sales??? I have posted specific links to *selected* sales only to highlight to people examples of what is ACTUALLY happening vs all the BS and conjecture that get's posted on this thread. The auction results I have posted list 100's of properties all selling at auction every week at good prices - in many cases near records for the area's. Last weekend in Sydney 60% clearance on volume up ~75% from the previous weekend.

It's strange, but my experience right now is so different to yours Pepperoni - maybe it's just the different price range (sub $2M), but every decent place I've had interest in in the last 3 weeks has sold, and for good prices. There are plenty of buyers out there, plenty of bids at most auctions. The only places I see languishing on the market are houses that typically languish anyway as they are compromised in some way or over-priced, or have a crap agent and/or are poorly presented.

Again, top tier property was hit hard in the early 90s as well - quite similar price falls and volume drop off to right now. It turned out that that was absolutely the bottom for prestige houses in Sydney and was by far the best time to buy for 20 years. I agree with you that we are in that situation now - especially for the prestige end - and this is no surprise, it happens periodically, but I think we are just about at the bottom from what I am seeing. Soon the people who are all selling there sub $2M places will start buying at the higher end.

Those of you who are expecting/hoping for a continuing price crash - well good luck to you, but I really don't see it happening, and I'm actually out there looking. If anyone can post specific instances of actual forced SALES at low prices in good area's in Sydney please go right ahead.

Cheers,

Beej

 

[Happy]

The auction results I have posted list 100's of properties all selling at auction every week at good prices - in many cases near records for the area's. Last weekend in Sydney 60% clearance on volume up ~75% from the previous weekend.


Those of you who are expecting/hoping for a continuing price crash - well good luck to you, but I really don't see it happening, and I'm actually out there looking. If anyone can post specific instances of actual forced SALES at low prices in good area's in Sydney please go right ahead.

Cheers,

Beej

Could be that people remove money from shaky stock market and plough into real estate.

This could be one of the reasons, another possibility that market bottomed out and is on a way up is also a possibility, but somehow I would not subscribe to this one.

In few years time we will be able to say who was closer to the mark.

 

[MrBurns]

We are going into an era of tighter money, property will crash, watch the cycle.

Ok set your watch by this -


1. Rising interest Rates

2. Falling Share Prices

3. Falling Commodity Prices

4. Falling Overseas Reserves

5. Tighter Money

6. Falling Real Estate Values

7. Falling Interest Rates

8. Rising Share Prices

9. Rising Commodity Prices

10. Rising Overseas Reserves.

11. Easier Money

12. Rising Real Estate Values

 

[pepperoni]

Those of you who are expecting/hoping for a continuing price crash - well good luck to you, but I really don't see it happening, and I'm actually out there looking. If anyone can post specific instances of actual forced SALES at low prices in good area's in Sydney please go right ahead.

Cheers,

Beej

ITS CRASHED!!! I cant post sales as nothing is selling apart from the odd place you find off homepriceguide that Im not even aware of.

Ive posted some stupidly cheap advertised places ... they are not selling or being withdrawn.

You even went to one in cremorne ... waterfront reserve for "1.69m" - 2 failed auctions in 6 months. In cremorne - they would have started expecting boom prices of mid to low 2s ! In the boom they would have got that price in fricken woy woy.


On 2 other points posted ... yes land banking will prevent the supposed "30% crash" for years if not forever.

And ill buy now because its easy to negotiate a bargain with literally every property Ive followed being passed in or withdrawn compared to 100% being sold last year. I think Ive seen one sale of something Id consider in the last 6 months.

And with stamp duty on a niceish house near the CBD running at $100k I sincerely hope Ill never feel the need to upgrade ... but thats another thread.

 

[MrBurns]

ITS CRASHED!!!

Think so ?
You ain't seen nothin' yet.

 

[pepperoni]

We are going into an era of tighter money, property will crash, watch the cycle.

Ok set your watch by this -


1. Rising interest Rates

2. Falling Share Prices

3. Falling Commodity Prices

4. Falling Overseas Reserves

5. Tighter Money

6. Falling Real Estate Values

7. Falling Interest Rates

8. Rising Share Prices

9. Rising Commodity Prices

10. Rising Overseas Reserves.

11. Easier Money

12. Rising Real Estate Values

I think its 5:35. Rates will drop asap if they can

 

[MrBurns]

I think we have a different scenerio than the last time, this will be a little different and a lot bigger.

The share crash to come and economy disruption will mean there will be a lot less people in the market and banks will tighten lending considerably.

I think the recent era of very low interest rates has pushed prices way beyond where they should be and the correction will come in the next 12 months, yes it's already started but a long way from being over.

 

[OzWaveGuy]

One or two sales??? I have posted specific links to *selected* sales only to highlight to people examples of what is ACTUALLY happening vs all the BS and conjecture that get's posted on this thread. The auction results I have posted list 100's of properties all selling at auction every week at good prices - in many cases near records for the area's. Last weekend in Sydney 60% clearance on volume up ~75% from the previous weekend.

It's strange, but my experience right now is so different to yours Pepperoni - maybe it's just the different price range (sub $2M), but every decent place I've had interest in in the last 3 weeks has sold, and for good prices. There are plenty of buyers out there, plenty of bids at most auctions. The only places I see languishing on the market are houses that typically languish anyway as they are compromised in some way or over-priced, or have a crap agent and/or are poorly presented.

Again, top tier property was hit hard in the early 90s as well - quite similar price falls and volume drop off to right now. It turned out that that was absolutely the bottom for prestige houses in Sydney and was by far the best time to buy for 20 years. I agree with you that we are in that situation now - especially for the prestige end - and this is no surprise, it happens periodically, but I think we are just about at the bottom from what I am seeing. Soon the people who are all selling there sub $2M places will start buying at the higher end.

Those of you who are expecting/hoping for a continuing price crash - well good luck to you, but I really don't see it happening, and I'm actually out there looking. If anyone can post specific instances of actual forced SALES at low prices in good area's in Sydney please go right ahead.

Cheers,

Beej

The Real Estate sector index (XPJ) looks very bearish. Right now it looks to have completed a significant 5 wave decline (of multiple degrees as shown) since near the beginning of 07. When a 5 wave decline on indexes is visible, it means there will be a 3 wave correction (where we are now, and a reason for the increased sales) and then another 5 wave leg down. Hence, once completed a further 5 wave decline is required. The minimum scenario is the completion a full zig-zag correction (5-3-5) from the top of 07. It should be noted also, that in the US the housing index topped in mid 2005 (and declined in 5 waves from memory), then it took 2yrs or so before people actually saw the fallout. I doubt it'll be any different in Aust.

 

[Beej]

ITS CRASHED!!!

I think your definition of a crash is different to mine and most posters here. Right now I would say the (Sydney) property market has turned down off a boom/high/peak. It is soft yes, especially in certain price brackets (which has happened before and will happen again), but it hasn't crashed. People here are looking for a 30-40% drop from the peak to call it a crash - a prediction that I believe will never come true. You seem to actually agree with me as you are saying that you agree now and the next year may well be the best time to buy for a decade! So what are we actually arguing about again??

I cant post sales as nothing is selling apart from the odd place you find off homepriceguide that Im not even aware of.

Well all I do is look at the auction results and click on the address of anything that SOLD that caught my eye - the links are actually from domain which is the SMH property web-site. The best way to gauge a market is to look at what is actually selling and what people are paying for it - you don't value a stock at level 10 in the depth do you??

Ive posted some stupidly cheap advertised places ... they are not selling or being withdrawn.

As I have stated in many other posts, this is classic real estate market behaviour. Part of what turns the cycle is the drop off in availability of good property because most owners don't have to sell, and therefore if things cool off too far they just withdraw and wait a couple of years. To be convinced we need to see actual SALES at "silly" prices. I don't see it.

You even went to one in cremorne ... waterfront reserve for "1.69m" - 2 failed auctions in 6 months. In cremorne - they would have started expecting boom prices of mid to low 2s ! In the boom they would have got that price in fricken woy woy.

That place was pretty crap - and I wouldn't buy it. Yes in a BOOMING market it would sell as buyers are desperate, but I am not and never have argued we are currently in a boom! In this sort of market sub-standard or compromised properties struggle to sell - why would you buy that if you can spend a bit more and get the place that is immaculate, not split into 2 worn out flats etc etc?

On 2 other points posted ... yes land banking will prevent the supposed "30% crash" for years if not forever.

Again - looks like we actually agree!

And with stamp duty on a niceish house near the CBD running at $100k I sincerely hope Ill never feel the need to upgrade ... but thats another thread.

Yes well stamp duty sucks - it does mean that as a buyer in higher price ranges you need to buy something you are happy to stick with for a fair while. However I should remind the first home buyers reading this that in NSW property under $500k is stamp duty FREE for you, and doesn't reach the full amount until $600k. In addition thanks to Mr Howard you also get an extra $7k thrown in from the tax payer as well!

Cheers,

Beej

 

[pepperoni]

The Real Estate sector index (XPJ) looks very bearish. Right now it looks to have completed a significant 5 wave decline (of multiple degrees as shown) since near the beginning of 07. When a 5 wave decline on indexes is visible, it means there will be a 3 wave correction (where we are now, and a reason for the increased sales) and then another 5 wave leg down. Hence, once completed a further 5 wave decline is required. The minimum scenario is the completion a full zig-zag correction (5-3-5) from the top of 07. It should be noted also, that in the US the housing index topped in mid 2005 (and declined in 5 waves from memory), then it took 2yrs or so before people actually saw the fallout. I doubt it'll be any different in Aust.

Interesting post.

So what % fall would you expect over how many months/years from here.

 

[kotim]

There is no shortage of property for rent in the market. I have a friend who a few months ago bought a house on the Sunshine Coast, Qld in a good area and he paid 600 grand. NOw the place remained vacant for rent at $380.00 a week, he had to drop the rent to the 350 a week mark to get it rented and this took about 10 weeks to rent it out..

Besides the fact that 350 is a piss poor return, there were no people beating a path to his door to rent it, yet if you listen to the marketing agents, this cannot happen in that area. However this is by no means an isolated occurence in that area.

All booms and bust are the same, people get hurt in the bust and it leaves a very long memory of pain, so what happens is that after the fall in prices of whatever magnitude the market goes sideways effectively for a number of years until wages catch up and the feeling/memory of pain dissapears. The pain has to subside enough for the mum and dad investers to get back in.

Remember there is way to go but down, both husband and wife have to work full time to afford the mortgage on a house in the coastal cities, We are now going into a softening period where unemployement will increase, wages won't grow like they supposedly have and besides the very real impact upon people the psychological impact will hurt even more.

Of course its not the end of the world, however it is a downturn/bust and the same will happen as it has before. Whatever happens now we can expect the property market to go down to sideways for the next 3-5 years at least.

If anyone does not believe this then go and have a look at the real estate data for the last 30-40 years and see what happens in cycles.

 

[robots]

hello,

no worries man,

have to wait another 3 yrs, and another 3 yrs, and another 3 yrs,

thankyou
robots

 

[Pommiegranite]

Phew...almost missed this one from yesterday. Momentum is certainly building.

http://www.news.com.au/story/0,23599,24410702-421,00.html

House prices tumble in 50pc of suburbs


September 28, 2008 03:00am

HOUSE prices fell in almost half of Sydney's suburbs in the three months to the end of August.

A new report released by property analysts Residex found that 241 of 543 Sydney suburbs - or 44.3 per cent - registered a downturn in capital growth.
Postcodes across the city, including the north shore and other affluent areas, recorded falls.
Even Point Piper, Sydney's most-expensive address, posted a drop in capital growth of 2.29 per cent during the August quarter to a median of $7.87 million.
Overall, Sydney house prices fell by 1.74 per cent to a median of $569,000, despite the drop in official interest rates in August.
However, the unit sector held up relatively well despite negative growth in 229 suburbs.
Apartment prices fell by just 0.75 per cent in the August quarter, but grew by 3.09 per cent in the year to the end of August to a median of $399,500 reflecting a supply shortage which is underpinning prices and pushing up rents.
Head Residex statistician John Edwards said housing affordability was at its lowest.
"Distressed sales are everywhere now," he said. "The decay is making its way into the middle- and upper-income areas as well."
Mr Edwards said stock-market problems had made parts of the north shore particularly susceptible - bad news for homeowners but good news for those in the market to buy a new home.
"You could find some really good sales in middle to upper-income areas such as Turramurra, St Ives, Pymble and Killara," he said.
Killarney Heights, Turramurra, Forestville, East Lindfield and Mount Colah were the worst performers in Sydney, recording drops of more than five per cent in the August quarter.
In some suburbs, this could represent a saving for homebuyers of up to $70,000.
Mr Edwards calculated that it takes 53.5 per cent of the average gross take-home wage to pay off a home loan and 37 per cent of the average gross take-home wage to pay off a unit.
"Australian families are carrying about as much debt as they can handle," Mr Edwards said.

"It's all about interest rates as far as the property market is concerned."

What the Reserve Bank does from now on will have a tremendous impact on confidence in the market and will essentially determine what happens to values.

"The interest-rate drop in August stopped the rot and brought a little confidence back to the market, which helped stabilise it and stopped it going into a tailspin."

Independent property commentator John Wakefield said a softening market coupled with an increase in stock this spring signalled a buyer's market.

"We will see more stock on the market as we move into spring," Mr Wakefield said.

"Regardless of whether the market is good or bad, there are always more properties offered for sale at this time of the year and we shouldn't underestimate the potential that added competition offers buyers. The market is poised for a long period of softness and buyers can take advantage of that."

Many of Sydney's successful suburbs were in the beachfront areas of the north and east and the inner west.

Bronte topped the best-performers list with a jump in capital growth for houses of 22.6 per cent to a median $2.39 million in the year to the end of August, while nearby Clovelly and Tamarama also posted capital growth of more than 20 per cent.

Homebush West and Enfield also made it onto the exclusive list registering growth of more than 19 per cent to record the same median house price of $749,500.

 

[robots]

hello,

phew, lucky i read that

fantastic article, units down 0.79% but up 3.09% for year in sydney, howzat the shock exchange down some 30% for the year

pretty good for the syd area. what do you think beej?

reality

thankyou
robots

 

[numbercruncher]

I find it kinda cute that you guys even want house prices to rise further considering exactly that has nearly toppled the worlds economy !


House prices to boom for ever , place yer bets, double down, split em aces !!

 

[pepperoni]

"Killarney Heights, Turramurra, Forestville, East Lindfield .... were the worst performers in Sydney, recording drops of more than five per cent in the August quarter."

Shock horror this confirms what Ive been seeing and saying about houses in sydneys north .... worse actually at 20% annual.

Unit are supposedly up although trending down? Does that say something about the asset or the people that are buying them Im sure the abs would tell us unit owners and 90% poorer than house owners which must therefore mean blah blah blah.

Anywayy whatever happens in sydney houses will eventually flow through just as the boom did ... just might take a while for *some of us* to *catch on*.