House prices to keep falling for years

[YChromozome]

The UK shortages were never qualified though were they? I haven't seen any links to articles that state actual numbers that are beliveable (the link provided doesn't state numbers) rather than broad estimates at best.

I think that is half the problem isn't it. I can remember earlier this year, there were variations of something like 2800% in the shortage numbers for Australia between the various Real Estate Bodies and Statistic providers.

One of the problems with this type of data is developments like this. While the markets are going up, the developers would rather hold on to these properties than sell at any price. Of the 18, only three are currently advertised.

However once the market starts to turn, fear comes in and they then put the entire 18 up for sale at any price just to move them.

There are plenty of these type of developments scattered around.

 

[Calliope]

What a freeking scandal, come on in young people, come on in just as we are about to go into the worst financial crises in our history, she ought to be locked up somewhere. It's disgraceful.

This is to encourage people who have never saved any money and probably never paid any taxes to buy a house with a gift of 14 or 21 thousand dollars for a deposit. In other words to buy a house they willl never be able to pay off. Isn't this what caused the sub prime mess that kicked of the world recession? Incidently, there is no limit on the cost of the house. You will get the grant if you are buying your first house for a million bucks. Developers and mortgage brokers are rubbing their hands with glee.

Saving is now a dirty word. There is no incentive to save. The policy is now spend, spend, spend. Never mind that some the taxes that paid for this came came from taxes paid on the interest on your savings and mine.

 

[Beej]

You must be joking there was no global financial crisis in the early 90's and property dropped by30% this will be 40% or worse .............

I think anyone talking about bargains now is in need of a reality check.

You conveniently forget to remind people that prior to the early 90s property slump, that in the space of 18 MONTHS during 1988/89 that price WENT UP BY 250%!!!! (Ie doubled and then half again) That 20-30% drop off was a minor correction of what had been a totally unprecedented massive rise in prices in a very short time - which of course is nothing like the current situation where it has taken 10 years to see about the same amount of increase.

That's why you are living in fantasy land if you think you will see 40% falls now, financial crisis or not. I'm prepared to bet my house on it. Are you??

Beej

 

[MrBurns]

You conveniently forget to remind people that prior to the early 90s property slump, that in the space of 18 MONTHS during 1988/89 that price WENT UP BY 150%!!!! That 20-30% drop off was a minor correction of what had been a totally unprecedented massive rise in prices in a very short time - which of course is nothing like the current situation where it has taken 10 years to see about the same amount of increase.

That's why you are living in fantasy land if you think you will see 40% falls now, financial crisis or not. I'm prepared to bet my house on it. Are you??

Beej

I'm debt free but I pity those who aren't , I won't argue with you but time will prove me right

 

[Temjin]

You conveniently forget to remind people that prior to the early 90s property slump, that in the space of 18 MONTHS during 1988/89 that price WENT UP BY 250%!!!! (Ie doubled and then half again) That 20-30% drop off was a minor correction of what had been a totally unprecedented massive rise in prices in a very short time - which of course is nothing like the current situation where it has taken 10 years to see about the same amount of increase.

That's why you are living in fantasy land if you think you will see 40% falls now, financial crisis or not. I'm prepared to bet my house on it. Are you??

Beej

You conveniently forget that you are STILL SUFFERING from your recency bias which I probably have mentioned to you a fair number of times from previous posts.

If I was a real estate agent, I would have easily conned you by using a chart that show the price trend of house prices in Australia from 1990 to 2006 and tell you that this type of growth will continue INDEFINITELY in the future, regardless of what will happen to the economy or the rest of the world. Price crash? No worries, it has always risen back up in the last 20 years!

Now if I were to show you the same graph but that is from 1950 to 1980, maybe i will have more trouble trying to do the same conning tactic.

Past performance is no indicator of future return!

You are living in fantasy land if you are trying to use historic examples to project into the future. It's one of the flawest thinking ever. Read "The Black Swan" book from Nassim Tabel instead.

You will be pleasently surprised when the "black swan" event do occur. And yes, they will eventually one day. People just don't accept it or prepare for it because it has never happened in their "reality".

 

[Temjin]

Yep, we should all buy now! There may be housing bubble in every countries around the world (except Japan/German), but there is none in here! *grin*

 

[Glen48]

In years to come people will look up scams on the net and find the South Seas , Tulips, Dot .Com Enron, Ostrich, Pine tree, and 2000 housing boom all created on Myths, greed, false info and like all scam crash as none can keep going up with out finding more suckers to pay the higher price each time.
WA houses are down 10% which is the Engine for the OZ economy the next lot of figure will show more declines else where in OZ.
Having brought and sold 7 houses the only one I have made money out of is the one I sold this year before the crashed.

 

[Mofra]

I think that is half the problem isn't it. I can remember earlier this year, there were variations of something like 2800% in the shortage numbers for Australia between the various Real Estate Bodies and Statistic providers.

Absolutely, and the motives of each body vary by quite a bit as well, purely coincidental of course

One of the problems with this type of data is developments like this. While the markets are going up, the developers would rather hold on to these properties than sell at any price. Of the 18, only three are currently advertised.

I'm also intersted in what qualifies as a vacant dwelling as well.
Do share accommodation vacancies count?
What about dual occupancy dwellings, semi-residential buildings, etc. etc.

Only real way to know is to do leg work in a particular area, and even in those cases the data/observations you'll receive are so localised they aren't applicable anywhere else (and subequently aren't particularly relevant to this thread).

 

[nunthewiser]

LOL well done temjin

 

[aleckara]

Yep, we should all buy now! There may be housing bubble in every countries around the world (except Japan/German), but there is none in here! *grin*

The saddest thing is that I can see this $21000 grant bringing demand up further very easily. The average first home buyer (most are young) has only seen that their parents did not have to work nearly as hard for a house and if they did work hard they paid it off much sooner (on average of course - there is always risk taking ways of making it better for yourself).

Having $21000 injected into the market, a lot of first home buyers will jump because they know if they jump last they will pay the highest price. (i.e better get in now). i.e they are the suckers taking up the previous booms debt. This should cause a speculative trend as the price will confirm they are correct.

Until the defaults come in. Great Rudd - make the problem worse for us.

 

[robots]

hello,

yes thanks for pulling up St Kilda Triangle,

infamous Babcock & Brown, one Green has left company after share went from what $30 to $2, yes $2, another Green has been murdered overseas with links to tax avoidance schemes,

the humble truck driving clan will now most likely get a shot and build something worthwhile,

stick with plan old vanilla no frills REAL estate,

plenty of negative equity around on those share certificates, but we will keep that hush hush here okay

we going three years strong crew, congratulations

thankyou
robots

 

[MrDamage]

Thank you for the kind words welcoming me to the threads etc.

One more question I have that someone hopefully can answer is what happened to Sydney property between 1979 & the late ninety's.

My mother tells me that my parents purchased their former house in a working class Sydney suburb in 1979 / 1980 for around $22000.

Even before the most recent housing boom, houses in the same area were selling for between $170K & $220K. Houses in the same area today sell for between $450K - $650.

What did the average earnings to house value look like during this period?

For me, house price values rising ~1000% between late 70's / early 80's up to mid - late 90's represents far bigger movement in pricing than anything we have seen in the last decade.

What were the bears saying back then?

 

[gfresh]

That 20-30% drop off was a minor correction of what had been a totally unprecedented massive rise in prices in a very short time - which of course is nothing like the current situation where it has taken 10 years to see about the same amount of increase.

Well for Brisbane, ABS has house prices going from 110 at the start 2006 to 145 in late 2007 (31% on average, some of course are closer to 40%+). That's only 24 months.

Even a "minor correction" back to 120 or so to early 2007 levels is 17%. All fine if you're well established since the early part of the decade, however such figures would devastate many lenders, overall confidence, and recent buyers in the market who got in the tail-end of the boom.

Even 10-15% is not nice on something like $400k. Maybe some will see the bigger longer-term picture, but for others I can't imagine it would be a good thought, especially knowing they could have bought bigger and better for same price.

The last, and fastest rising markets fall first, we've seen that overseas, and we're starting to see it here. WA first, then probably QLD..

 

[gfresh]

Here is Sydney.. Looking at this, I'd probably agree with your general thoughts BeeJ, that Sydney has been a lot more subdued recently, and prices may not fall too much.

 

[CamKawa]

 

[Beej]

I'm debt free but I pity those who aren't , I won't argue with you but time will prove me right

Whilst I usually find it unnecessary to discuss personal financial details on public internet forums, you may be pleased to know that I too am debt free. I am also sick of arguing here and believe time will in fact prove me right! We shall see.

Cheers,

Beej

 

[Beej]

Here is Sydney.. Looking at this, I'd probably agree with your general thoughts BeeJ, that Sydney has been a lot more subdued recently, and prices may not fall too much.

Thanks for that gfresh - that's a good graph. I would expect to see something similar to the past 4 years in Sydney pan out from here in other markets in Oz, especially so now with the increased FHBG and falling interest rates.

Cheers,

Beej

 

[Temjin]

It STARTED GUYS, GO GO GO GO! Beej, I am inviting you to join this discussion too. It's refreshing to hear from both sides.

http://cij.inspiriting.com/?p=562

“Property 2009: Crash, Boom or Stagnate?!” debate begins today!

Just a reminder to all our readers: the Property 2009: Crash, Boom or Stagnate?! forum debate is starting now.
Two of our special guest experts will be taking part in this debate. See Interviewing Steve Keen for the upcoming property forum debate and Interviewing Michael Yardney for the upcoming property forum debate.

http://ourfinanceblogs.com/forums/index.php?topic=18.0

Michael Yardney - Director of Metropole Property Investment Strategists

and

Associate Professor Steve Keen - Oz Debtwatch

will be taking part in the discussion, and already have too. It will be an excellent thread with professional opinions.

 

[MrDamage]

What do the bears think of these numbers relating to Sydney house prices.

Data shows % change to average house price - 1970 - 2003:

% change
1970 18,700
1971 21,200 13
1972 23,700 12
1973 27,400 16
1974 31,800 16
1975 34,300 8
1976 36,800 7
1977 39,200 7
1978 43,200 10
1979 50,700 17
1980 68,850 36
1981 78,900 15
1982 79,425 1
1983 81,425 3
1984 85,900 5
1985 88,350 3
1986 98,325 11
1987 120,025 22
1988 141,000 17
1989 170,850 21
1990 194,000 14
1991 182,000 -6
1992 183,300 1
1993 188,000 3
1994 192,375 2
1995 196,750 2
1996 211,125 7
1997 233,250 10
1998 248,750 7
1999 272,500 10
2000 287,000 5
2001 322,500 12
2002 387,500 20
2003 454,250 17

 

[CamKawa]

It STARTED GUYS, GO GO GO GO! Beej, I am inviting you to join this discussion too. It's refreshing to hear from both sides.

http://cij.inspiriting.com/?p=562


http://ourfinanceblogs.com/forums/index.php?topic=18.0

Michael Yardney - Director of Metropole Property Investment Strategists

and

Associate Professor Steve Keen - Oz Debtwatch

will be taking part in the discussion, and already have too. It will be an excellent thread with professional opinions.

Is that an ad?