House prices to keep falling for years

Santoro · 19 October 2008

Hong Kong is undergoing a rare bout of deflation, brought on by the Asian financial crisis in 1997 and following a strong inflationary trend that lasted for decades in the territory. Economic contraction in Hong Kong has never previously resulted in inflation dipping below zero and recovery was invariably quick. The present deflationary situation is unique. On the one hand, the economic adjustment needed after the crisis was substantial; on the other, this adjustment could only be achieved through real cost reduction, as the linked exchange rate system prevents any nominal adjustment through currency depreciation. To restore external competitiveness, Hong Kong's property prices and wage costs had to fall and this inevitably led to serious deflation. In the more than two years since the outbreak of the crisis, Hong Kong property prices have roughly halved from their peak and wages have been slashed or frozen. Have they fallen enough to revive cost competitiveness and bring an end to this deflationary cycle?

Don't come tell me property prices don't fall fellow posters. This an atricle from 2000 post the Asian financial crisis....admittedly may not be the same situation ....but for better or worse who knows, agreed in the long term house prices are a good investment and if your raising a family who gives a toss.......but fact is property prices can and do fall....look at HK and Japan following their falls from property booms........and now the US and the UK......

Beej · 19 October 2008

MrBurns said:
Not sure what Warren Buffets plan is , that intrigues me.

"Buffer Feels The Fear And Likes It"
http://business.smh.com.au/business/buffett-feels-the-fear-and-likes-it-20081018-53qb.html

Cheers,

Beej

SBH · 19 October 2008

robots said:
hello,

here we go fellow money renters,

NAB just come to the party with 25 basis pt drops, wow all those extra rises and a bit more have gone vanished disappeared completely,

my rate gone from 9.02 to 8.02 and will probably get 25pts in the next fee days when the CBA moves,

nirvana, any questions fire away

thankyou
robots

Its great to hear about your interest rate cut. That means the economy is going good right? Imagine how high houses will go when interest rates fall down to 1% like in america!

Beej · 19 October 2008

nunthewiser said:
Expats set to boost property market
19/10/2008 12:10:01 PM
Expat Australians looking to flee the global financial crisis are poised to set off a fresh wave of buying in property markets nationwide.

Jennifer Nielsen, chief executive of Loan

Market Group, says inquiries for home loans from expatriates have escalated in recent weeks. Loan Market operates a home finance broking group including leading independent broker X Inc Finance.

"There is strong interest from expatriate Australians, many of them banking and finance professionals, who are looking to return home to escape the credit crunch in places like London and Singapore," Ms Nielsen said.

"They want to buy property before they come back - we now have three in-house brokers dedicated to servicing inquiries from expats on top of our normal inquiries."

Ms Nielsen said interest from expatriates was expected to escalate in response to home mortgage rate cuts in Australia and the federal government's $10.4 billion economic package.

"The big drop in the Australian dollar is also a huge advantage to returning expats," she said.

"If they are cashed up in US dollars or UK pounds, they are keen to come into the Australian property market right now and chase a bargain."

Ms Nielsen said the home loan market had been resilient in recent months, despite ongoing concerns about the impact of a volatile world economy on Australia.

"While there is no question that the underlying residential real estate market in Australia has slowed in the past 12 months, the volume of inquiries about home loan finance is actually quite solid," she said.

"The interesting trend is the clear majority of people are inquiring about new finance, as opposed to people who are struggling somewhat and seeking refinance."

Ms Nielson said a tough rental market in most capital cities was the primary force pushing first home buyers to seek home loans.

"Many (renters) are looking to escape the rental trap by buying," she said.

Now THAT is an interesting article! Probably won't have much of an impact on national or regional median prices, but more expensive houses in good area's in the major cities could well see a good pick up in demand, and prices due to that "expat effect". Something to consider for anyone who is in that segment of the market, especially if you are betting on further price falls......

Cheers,

Beej

gfresh · 19 October 2008

Everything comes down to interpretation doesn't it

First thing when I read that, is that are financial expats put out of work in finance (due largely due to the causal crash of housing prices!) in both the UK, and the US, really going to as first priority buy a property here??

Surely, out of everybody, they would have an incredible sense of caution after coming from such a market to sunny Australia.

numbercruncher · 19 October 2008

returning unemployed expat hippys will be outweighed by the coming reduction in Immigration ...... imho .....

Beej · 19 October 2008

gfresh said:
Everything comes down to interpretation doesn't it

First thing when I read that, is that are financial expats put out of work in finance (due largely due to the causal crash of housing prices!) in both the UK, and the US, really going to as first priority buy a property here??

Surely, out of everybody, they would have an incredible sense of caution after coming from such a market to sunny Australia.

But if they have been saving there pennies and pents, and the aussie dollar has just come off 20-40% (depending on pennies or pents!), then things start to look pretty cheap here don't they??? It's definetly something to think about.... Expat money has certainly paid a big role in driving Sydney property prices before.

Cheers,

Beej

Markcoinoz · 19 October 2008

PropertyGuy said:
you are a forum troll who is making no sense - im not responding to you anymore. The residential property market is robust and strong. sydney, perth and brisbane have some issues but you cant make the rest of the country have imaginary issues just by typing it in a forum - facts are facts.

If there are any people out there who have serious desire to discuss this issue, I would like to hear views on how the current stock market crash will affect the residential property market - personally im not really interested in views on the current state of the property markets as I am fully aware of the current status of markets.

I can offer current market status for Melbourne market including sale rates for most major projects currently on the market - ask me the project, i can tell you the meter rate's, sales rates and availability.

Hi PropertyGuy,

People lose jobs.

Unemployment goes up.

If you really want a pulse on what is happening, ask a Truckdriver, especially in Melbourne. Transportation is a leading indicator. If our transport industry is not as robust as what it has been earlier on in the year and truckies are losing their jobs, that tells me that consumers are not spending as much and tightening their belts. Have you checked out Harvey Norman's sales figures lately? Isn't that one of the first port of calls for new home owners!!!

I have no doubt that unemployment will increase over the coming 12 months with alot of pain and suffering to go with it. The car industry is cactus with many losing their jobs. Small businesses are suffering and can only get worse.

PropertyGuy, imo this global credit crunch has not even fully unravelled yet.
We still have the mother of all mothers to go. The $50 Trillion Derivitives market to be unwound. If and when that should happen there is no government on earth could stop it. Why do you think Bush and his merry men were so protective of preventing Lehman Bros and the other 9 banks from going under. It would have been a domino effect.

When you stop and consider that Australia's housing is approximately 8 x times avg annual income and we are sitting on a potential time bomb with the financial crisis gaining momentum, my clock says the last place i would want to invest in now is property.

In fact, liquidating your assets would be the prime concern unless you are prepared to have a house not as an investment.

But hey, don't listen to me, i only listen to what the truckies have to say.

Cheers markcoinoz

robots · 20 October 2008

SBH said:
Its great to hear about your interest rate cut. That means the economy is going good right? Imagine how high houses will go when interest rates fall down to 1% like in america!

hello,

the money that doesnt go to the mortgage(interest) thanks to 1% interest rates will just go to savings offsetting anything that occurs, great stuff isnt it

save another 9-10k a year, awesome

win win everyway you look at it, just goes to show you have to be in it to win it

imagine just paying the principal and a little bit of margin, investment properties will be cash flow+, now do you think you will get a letter from the landlord?

i dont think so

great discussion, have a great day everyone in this fine country

thankyou
robots

lular · 20 October 2008

robots said:
hello,

the money that doesnt go to the mortgage(interest) thanks to 1% interest rates will just go to savings offsetting anything that occurs, great stuff isnt it

save another 9-10k a year, awesome

robots

Are you saying you have a $1,000,000.00 loan?

How do you get this saving with a 1% interest rate cut.

numbercruncher · 20 October 2008

lol Robi, does your mrs ever slap you around ?

save another 9-10k a year, awesome

Just keeping your spruiking honest, can you elaborate on this plz ?

Markcoinoz · 20 October 2008

Markcoinoz said:
Hi PropertyGuy,

People lose jobs.

Unemployment goes up.

If you really want a pulse on what is happening, ask a Truckdriver, especially in Melbourne. Transportation is a leading indicator. If our transport industry is not as robust as what it has been earlier on in the year and truckies are losing their jobs, that tells me that consumers are not spending as much and tightening their belts. Have you checked out Harvey Norman's sales figures lately? Isn't that one of the first port of calls for new home owners!!!

I have no doubt that unemployment will increase over the coming 12 months with alot of pain and suffering to go with it. The car industry is cactus with many losing their jobs. Small businesses are suffering and can only get worse.

PropertyGuy, imo this global credit crunch has not even fully unravelled yet.
We still have the mother of all mothers to go. The $50 Trillion Derivitives market to be unwound. If and when that should happen there is no government on earth could stop it. Why do you think Bush and his merry men were so protective of preventing Lehman Bros and the other 9 banks from going under. It would have been a domino effect.

When you stop and consider that Australia's housing is approximately 8 x times avg annual income and we are sitting on a potential time bomb with the financial crisis gaining momentum, my clock says the last place i would want to invest in now is property.

In fact, liquidating your assets would be the prime concern unless you are prepared to have a house not as an investment.

But hey, don't listen to me, i only listen to what the truckies have to say.

Cheers markcoinoz

Just to highlight something.

I was wrong when i said the $50 Trillion Derivatives market.

Try $600 Trillion.

We have reached the point of no return. A combination of globalization, greed, Central Banks, a fiat currency, 9000 hedge funds and $600 trillion worth of derivatives has brought the crisis to a boiling point. At this time, governments around the world are throwing $100 bills at the fire. It will have no effect; you cannot solve a financial problem caused by easy money by making money still easier. You can, however, create hyperinflation.

http://www.321gold.com/editorials/moriarty/moriarty102008.html

And some people here think our property market will continue on its merry way upwards...

Cheers markcoinoz

explod · 20 October 2008

Markcoinoz said:
Just to highlight something.

I was wrong when i said the $50 Trillion Derivatives market.

Try $600 Trillion.

We have reached the point of no return.

Yes I worked out and posted a couple of weeks ago that the derivatives amount stacked in US $100 bills would be 9 million miles high and end to end out of the universe.

Out of this world indeed.

Ageo · 20 October 2008

Markcoinoz said:
Just to highlight something.

I was wrong when i said the $50 Trillion Derivatives market.

Try $600 Trillion.

We have reached the point of no return. A combination of globalization, greed, Central Banks, a fiat currency, 9000 hedge funds and $600 trillion worth of derivatives has brought the crisis to a boiling point. At this time, governments around the world are throwing $100 bills at the fire. It will have no effect; you cannot solve a financial problem caused by easy money by making money still easier. You can, however, create hyperinflation.

http://www.321gold.com/editorials/moriarty/moriarty102008.html

And some people here think our property market will continue on its merry way upwards...

Cheers markcoinoz

Hmm everywhere i look now it seems more obvious that the central banks are responsible but most importantly the general public is becoming more educated.......

1 thing i do not get is if money supply increases then how can inflation be at stable levels as the RBA mentions??????? A person with little brains would understand that you cannot stop the increase of inflation by continuing to inflate it even more (i.e increased money in circulation).

Beej · 20 October 2008

Markcoinoz said:
You can, however, create hyperinflation.

http://www.321gold.com/editorials/moriarty/moriarty102008.html

And some people here think our property market will continue on its merry way upwards...

Cheers markcoinoz

Which is it to be then - hyper-inflation? Or falling house prices? The two do not go together!

Beej

Julia · 20 October 2008

explod said:
Yes I worked out and posted a couple of weeks ago that the derivatives amount stacked in US $100 bills would be 9 million miles high and end to end out of the universe.

Out of this world indeed.

Explod, I missed that. Could you give me a link to your earlier post?
Does it make clear how you came to that conclusion and where the input data came from?
I ask because there seems to be such hugely varying estimates of the worth of the derivatives still out there.

jonojpsg · 20 October 2008

Ageo said:
Hmm everywhere i look now it seems more obvious that the central banks are responsible but most importantly the general public is becoming more educated.......

1 thing i do not get is if money supply increases then how can inflation be at stable levels as the RBA mentions??????? A person with little brains would understand that you cannot stop the increase of inflation by continuing to inflate it even more (i.e increased money in circulation).

Hey Ageo,
Have you looked at the Crash Course posted here elsewhere? Chart looks suspiciously exponential like many other charts of significant quantities - I fully recommend that chapter (see link) for anyone looking at this chart.

http://www.chrismartenson.com/crash-course/chapter-3-exponential-growth

Interesting times ahead

generalofthearmy · 20 October 2008

numbercruncher said:
I guess its too late for the money renters who bought last year, they are toast and will probably never recoup their investement in their entire lives .......

HAHAHA, laughable assertion.

I notice the amount of RE forsale in Queensland is treble of what it was this time last year and the flood gates are only beginning to open ......

there have been plenty of downturns without flood gates doing anything.

Ive noticed desperation in the sales adverts, as an example Stockland in the weekend bulletin preaching how those who hesitate lose money, those who boughht (land) in 1996 are now 300k better off (haha) , buy now buy now, it almost reads like begging, lala .....

yeah, but salesmen are generally desperate BS artists. nothing unusual here.

Anyways, any of the regulars here at ASF would of known well in advance of what was coming and why it was coming and positioned accordingly so I imagine its happy days for most asfers .....

these happy days are yours and mine, happy days.

PropertyGuy · 20 October 2008

Markcoinoz said:
Just to highlight something.

I was wrong when i said the $50 Trillion Derivatives market.

Try $600 Trillion.

We have reached the point of no return. A combination of globalization, greed, Central Banks, a fiat currency, 9000 hedge funds and $600 trillion worth of derivatives has brought the crisis to a boiling point. At this time, governments around the world are throwing $100 bills at the fire. It will have no effect; you cannot solve a financial problem caused by easy money by making money still easier. You can, however, create hyperinflation.

http://www.321gold.com/editorials/moriarty/moriarty102008.html

And some people here think our property market will continue on its merry way upwards...

Cheers markcoinoz

Thanks for your response Mark.

I dont understand alot about the world of Global Finance and Derivitives, but if someone owes $600 Trillion, surely someone else is owed $600 Trillion - who is this entity/demographic that is owed this money?

Also, if Im owed $600 Trillion (Im obviously a pretty smart cookie) and the world markets were about to hyperinflate making my $600 Trillion worth $10 Trillion, wouldnt I be better off just taking $15 Trillion now and writting the rest off as a lesson in "dont be too smart"?

The question above may be a little simple, but this whole thing doesnt make any sense to me.

With regards to hyper inflation - buy as much property as you can without debt. High inflation is the low geared property investors dream come true. If you are geared, lower your gearing.

Regards,

Mofra · 20 October 2008

PropertyGuy said:
I dont understand alot about the world of Global Finance and Derivitives, but if someone owes $600 Trillion, surely someone else is owed $600 Trillion - who is this entity/demographic that is owed this money?

Also, if Im owed $600 Trillion (Im obviously a pretty smart cookie) and the world markets were about to hyperinflate making my $600 Trillion worth $10 Trillion, wouldnt I be better off just taking $15 Trillion now and writting the rest off as a lesson in "dont be too smart"?

PG,

That is the total value of derivatives taken on both sides (although the figures I have read are US$171trillion, almost 11 times the entire US economy)
The value isn't the major concern - it's the spread (effectively the risk each party has taken with their position) you need to take into account, as even the most gung ho of hedge fund traders often have competing positions. Again, my figures (read) are a 2% spread risk ~ US$3.4trillion

Governments will struggle to cover the risk in the event of a complete meltdown, however as we've seen, finance market consolidation (t/o)conditions include an assumption of the takeover partie's debt/risk. Even the best estimates of what is going to happen next are just guesses, so in the menatime, sit back and enjoy the ride

Cheers

House prices to keep falling for years

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Beej

SBH

Beej

gfresh

numbercruncher

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Markcoinoz

robots

hello

lular

numbercruncher

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Markcoinoz

explod

explod

Ageo

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