House prices to keep falling for years

[numbercruncher]

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*

Cracks me up , you can even hear is voice as you read the words lol ..

 

[robots]

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

hello,

not a bad gig Mr Damage, just for putting the key in the door man

thankyou
robots

 

[YChromozome]

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

Sydney reached an equilibrium point in late 2003 where people could no longer afford Sydney houses. Simply put, Sydney house prices reached the ceiling of affordability in 2003.

So the real question is where is the data from 2004 onwards? Anyone worth their weight in gold, knows it corrected a few percent then leveled out. Why is this data missing? Why does it just happen to stop at 2003?

 

[Temjin]

Is that an ad?

It's not my business for sure.

Regardless, Steve Keen is participating the discussion, so this would be interesting.

 

[robots]

hello,

i hope steve keen discusses his participation in the greatest credit bubble the world has seen (not my words)

thankyou
robots

 

[MrDamage]

Sydney reached an equilibrium point in late 2003 where people could no longer afford Sydney houses. Simply put, Sydney house prices reached the ceiling of affordability in 2003.

So the real question is where is the data from 2004 onwards? Anyone worth their weight in gold, knows it corrected a few percent then leveled out. Why is this data missing? Why does it just happen to stop at 2003?

I didn't intentionally leave any data out - I just didnt have time to find a more up to date data set.

It could be argued though that we have reached this same point a couple of times before according to the data set - wouldn't you agree? - e.g. 1982 - 1985 & 1991 - 1995.

 

[robots]

hello,

http://www.tradingroom.com.au/apps/view_article.ac?articleId=236044

here we go, even Keen is on the bandwagon, cant wait to be just paying the Principal on my loan just to keep the roof over my head,

awesome, word out to token multimillionaire who is having a bit of time out, the views keep pumping along

thankyou
robots

 

[nunthewiser]

Gday robots .


any idea when this new home buyers gift comes into effect or is it immediately ?

thanks

 

[robots]

hello nunthewiser,

i think it commences around November 2008,

hope you have had a great day

thankyou
robots

 

[nunthewiser]

hello nunthewiser,

i think it commences around November 2008,

hope you have had a great day

thankyou
robots

cheers , id better get back to planting some pretty flowers and paintin the fence then, the day was excellent thanks for asking.

cheers for answering
have a good evening

 

[SBH]

How about - stating the goal as having a REALLY nice, luxury roof over your head with enough room for your family, lot's of living space, landscaped gardens, pool, entertaining area etc etc, in a quality, wealthy area of one of the best cities in the world where everyone wants to live, with good schools and infrastructure all on hand. Plus own it outright so no rent or interest to pay, and all income earned goes towards investments for other lifestyle desires (sports cars, holidays, hobbies etc), and a financially independent retirement.

Does that sound better? That's how I see the goal.

Even if you choose to rent and have the discipline to invest in other sectors to achieve the financial benefits that owning your own house will provide, at some point in your life you will have to cash that in and buy a house anyway! Unless you want to still be renting and moving every 6-12 months when you have teenage kids in the local school, or are retired etc etc. And that's the point - everyone needs somewhere to live, and to a large extent where you live defines your lifestyle and quality of life, as you spend a LOT of time there!

PS: To MrDamage - good posts - read some of my posts on this thread for a different view than many of the responses you have got here already. Pay off your mortgage as quickly as you can, in a few years you will look back and realise you own an asset with real value and that you get to live in rent free while all the doom-sayers here will still be paying ever-increasing rent and still whining about how expensive houses are WHERE THEY WANT TO LIVE! There are plenty of cheap houses around of course but the guys here don't want to live in those areas!

PPS: When I heard about the increase in the FHBG I laughed and laughed! Tried not to come and read all the rantings that would produce on this forum but I couldn't resist Still sick of arguing here and have made all my points before - just add this grant increase to the interest rate reduction cycle and it's not hard to figure out what happens from here for FHBs.

PPPS: I noticed that all the negative mainstream press articles get posted here, but NONE of the more positive ones like this one: http://www.smh.com.au/news/national/sydney-property-buoyant-in-slump/2008/10/08/1223145446496.html, which actually states how Sydney property is actually holding up pretty well. I have stated many times that I think Sydney is near/at the bottom now, but that Perth and other parts of the country etc are a couple of years behind the Sydney cycle. Those looking for 40% falls are living in fantasy land - this property cycle is just like the early 90s downturn and it is playing out exactly the same so far.

Cheers,

Beej

So you think bribing young people to buy houses when our economy is on the brink is funny? Well laugh it up. We certainly know where the government stands now dont we! The plan is to do whatever is neccessary to save the price of your houses and to hell with affordability. This is one of the most irresponsible policies ever seen in this country. If FHBs pile in now and it all crashes next year will rudd give an apology to the young people who he has encouraged to financial ruin??

Also did anyone see Tanner on lateline openly telling the country to spend spend spend their government handouts? Now that was funny

 

[Ruincity]

So I hear about this extra 7k on the home buyers grant and being in this class and eligable I think great... Gotta take advantage of this!! Might be the extra little kickstart I need and face it I don't want to miss out on 14k now!! What if they abolish it??

And then I think well, at least I can afford it..
Have a fair lump sum of cash in the bank and maybe I will even buy a house and keep some spare cash on the side..

It then occurs to me a few days later that isn't this a creation of sub prime?

Doesn't this just lead poor first home buying lambs with very little capital and a world possibly on the brink of a recession/depression to the slaughterhouse!?

What if things do go towards increased unemployment and lack of opportunity.. These marginal suspects lured into the "dream" go downhill bankrupt and we have our own little subprime first home buyers governement fuelled crisis...

VERY VERY dangerous move I think..
The more I think of it the more irresponsible it seems..

This I read today:

"First home buyers have been coming into our office, which is unusual as it's usually only second and third home buyers who can afford a new home. But the $21,000 is effectively the full 5 per cent deposit on a $420,000 package."

Sounds familiar..

The rest of the trash here: http://www.news.com.au/business/story/0,27753,24504122-5013951,00.html

 

[YChromozome]

It could be argued though that we have reached this same point a couple of times before according to the data set - wouldn't you agree? - e.g. 1982 - 1985 & 1991 - 1995.

I don't have data (for Sydney) at the moment to make any definite conclusions, but I can't imagine that was the case. I believe you are purely looking at the price of the asset and seeing it decline. Asset prices always have cycles, they go up, then they go down.

I was talking more about the ability of the owner to service the mortgage. You would have to look at affordability data to determine this.

When the bank standard lending rate hit 17% in 1989, household debt to disposable income was 47%. RBA data shows the average housing loan repayment [Aust Wide, not Sydney] consisted of 6% of household disposable income.

In December 2007, the bank standard lending rate was only 8.55%. Let, because Australian's houses are worth a lot more (household debt to disposable income is 160.4%), the housing loan repayment now makes up 9.5% of household disposal income.

So households are now paying 58% more in mortgage repayments (inflation adjusted) than they were when interest rates peaked at 17% in 1989.

To put it another way, if debt stayed the same, we are [Dec 2007] paying the equivalent of 26.8% interest today. Now does any one want to say "in my day, we paid 17% interest. Interest rates have never been lower" ?

 

[gfresh]

And then I think well, at least I can afford it..
Have a fair lump sum of cash in the bank and maybe I will even buy a house and keep some spare cash on the side..

Just because people can get a $14-21k discount, doesn't mean they have to buy just to get the discount. What will happen after June 09 when this short-term subsidy is abolished?

Might get a bargain well in excess of $14k if you negotiate well with a seller who missed those hoards of FHOB that are going to flood the market.

I have concerns too.. Last I checked there weren't too many brand new homes in the inner city, and the outer suburbs are the ones already being hit by falling values more than inner city. So it's indeed leading to potential pain. Estate homes are $400k+ these days anyhow, not quite entry level.

 

[Ruincity]

It's been said and heard by me before that all that is happening is the protection of inflated housing prices.
I firmly believe this and it is a manufactured and unnatural process that the government is initiating that will/may inevitably lead to an even larger fall than what would probably have more naturally occurred.

I know first home buyers are only a small percentage but the area's these people typically buy are the area's that are most volatile to rapid price reduction in the event of a housing correction..
Seems to have too much of a sub prime ring to me...

Nevertheless we have mortage insurance and all that sort of stuff here and regardless of that article I posted from my own experience you need a whole lot more than a first home buyers grant to get a loan and a house around here......

I just think it's quite a dangerous gamble...

 

[YChromozome]

Doesn't this just lead poor first home buying lambs with very little capital and a world possibly on the brink of a recession/depression to the slaughterhouse!?

Rudd has been briefed on the weekend, and now understands about leveraging.

This is great that the government can spend $21k and get $420k worth of value to help keep construction jobs.

 

[chops_a_must]

What was Costello's quote many years back when apartments in Melbourne tanked?

"Property is not a one way bet." ??? Does anyone remember?

 

[Temjin]

I just think it's quite a dangerous gamble...

It's very true because of the "leverage" involved in properties. It's great when it raise, but a huge stab in the back when it drop. I always scare the s**t out of my friends when I told them about the leverage they are getting into. They never thought about it, and then denial it by claiming no one has ever sold a property at a lost. At least they wouldn't anyway.

People tend to think their job is completely secured and generally leave very little saving behind to cover their expenses in the event of forced redundancy. Just look at the national saving rate would have scared you.

It was negative in the US for a while, and has since creeped up back to 0% to slightly positive %.

 

[MrBurns]

So you think bribing young people to buy houses when our economy is on the brink is funny? Well laugh it up. We certainly know where the government stands now dont we! The plan is to do whatever is neccessary to save the price of your houses and to hell with affordability. This is one of the most irresponsible policies ever seen in this country. If FHBs pile in now and it all crashes next year will rudd give an apology to the young people who he has encouraged to financial ruin??

Couldn't agree more, why doesnt the dumb freeking media pick this up ?

 

[YChromozome]

Just look at the national saving rate would have scared you.

It was negative in the US for a while, and has since creeped up back to 0% to slightly positive %.

Have you seen the Australian Net Savings rate?