Glen48
Money can't buy Poverty
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N Z house prices are down 5% just the start of more to come
House prices to keep falling for years
- Thread starter Pommiegranite
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hello,
if i'm on 8% now and goes down to 1% as mentioned by SBH, that makes the interest component of a P & I loan very very very low,
on payments of $300pw, i reckon $200 would be interest, fantastic when they get to 1%,
so for the uneducated: 52wks x $200pw=$10400
no mrs is on the same ride Number, life
thankyou
robots
explod
explod
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Yeh, BANG allright and then we will have a POP and probably a few PUFFS. Used to be a reliable steady stock the ole CBA but like all in the new uncertain times it has become very volatile.
Not looking too good, everyone is trying to sell the house.
thankyou
explod
good evening explod,
somebody used to keep records of places for sale but havent seen them post for a while now
with the rba meeting in a few weeks it will be on again, 50 basis points, what you reckon explod?
thankyou
robots
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I wouldnt consider Enzo an expert on property. Actually, I think the post he holds precludes him from making any statements that would not be in the best interests of the group that he represents. He might be an expert on the rules of conduct for agents etc, but when it comes to market analysis, his opinion would hold no weight with the industry whether it be up or down.
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are the amount of houses currently listed any different to previous spring/summer house selling listings ?
being that spring/summer the more traditional times when the majority of houses are listed
being that spring/summer the more traditional times when the majority of houses are listed
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Someone mentioned affordability in a response to my post - thought you might like to read this:
The affordability of housing finance is a necessary condition for an investor to enter the
residential property market. However, affordability on its own is not enough to determine
whether housing is a good investment. A good investment decision is based on a comparison
of the cost of funds (real interest rates) or opportunity costs with the expected real returns (real
capital growth and rent).
The principal reason for the sensitivity of residential property markets to interest rate movements
is that strongly growing interest rates limit the capacity to finance housing investment. Likewise,
when interest rates fall, the size of an affordable loan is higher for any given income.
The cost of meeting repayments for a 25 year loan covering, say, three-quarters of the value of
a median-priced house provides a useful measure of home loan affordability. Table 2.6 shows
mortgage repayments for such loans at current standard variable housing loan interest rates as
at June 30th each year, expressed as a percentage of total full-time earnings. It should be
noted that, to provide a better indication of housing affordability, full time earnings are being
calculated at the state level.
This table does not necessarily represent the typical situation for all home buyers. Many factors
including the price of the property, amount of deposit, and income (especially two income
families) can affect individuals. Rather, it is a guide to changes in affordability, and variations
between states over time.
Over the past twenty years, the percentage of income allocated to mortgage repayments was at
its highest level and affordability was at its lowest level, across all states in 1989–1990. This
substantial deterioration was caused by a huge leap in house prices from June 1988 combined
with record high interest rates. The housing rate remained as high as 17% between June 1989
and March 1990.
Affordability was at its worst in Sydney (86.7%), Melbourne (68.8%), Canberra (48.6%),
Perth (48.8%), Adelaide (45.9%), and Hobart (38.7%) in June 1989. For Brisbane (49.3%) and
Darwin (37.3%), affordability fell to its lowest level in June 1990.
The steady fall in the housing interest rate to 8.75% from September 1993 to August 1994, as
well as growth in nominal wages, raised home loan affordability to its most favourable position
since the mid-1980s. By June 1994, mortgage repayments as a percentage of income had
fallen to 43% in Sydney, 34% in Melbourne, 30% in Brisbane, 26% in Adelaide, 27% in Perth,
25% in Hobart, 31% in Canberra and 31% in Darwin.
Despite solid growth in wages and minimal change in the level of median house prices, interest
rate rises in late 1994 (10.5% by December 1994) reduced home affordability marginally across
all capital cities by June 1995.
However, the percentage of income allocated to mortgage repayments decreased and remained
extremely low over the 1997 to 1999 period, during which all capital cities experienced their
most affordable housing prices since the early 1980s. Interest rates during this period had fallen
to 6.50% by December 1998, the lowest level in over twenty-five years. Home affordability was
at its most favourable position in Melbourne (29.6%) and Sydney (38.9%) at June 1997, in
Brisbane (22.4%), Perth (21.5%), Hobart (17.7%) and Adelaide (19.6%) at June 1998, and in
Canberra (21.2%) and Darwin (25.3%) at June 1999. These were generally the best
affordability levels since the early 1980s and, in some capitals, longer.
Affordability in Sydney (50.3%) and Melbourne (42.3%) by June 2000 had dropped to its most
challenging level since 1991. It was reduced by strong growth in median house prices from
1997, as well as by rises in housing rates from November 1999 to August 2000, despite strong
wages growth.
The fall in the housing interest rate, to 6.8% in 2000/01, resulted in home affordability improving
dramatically in each capital city by June 2001. However, strong price growth in 2001/02 across
all capital cities outweighed the 0.5% drop in interest rates and wages growth in this year,
resulting in home affordability again deteriorating. Further price rises in 2002/03 across the
board resulted in further deterioration in home loan affordability.
While price growth slowed across all capital cities over 2003/04, interest rate rises in December
quarter 2003 resulted in home affordability deteriorating further by June 2004. Affordability was
particularly challenging in Sydney (65.0%), far ahead of Melbourne (43.8%), Brisbane (39.4%),
and Canberra (41.6%). On the next level down, affordability was reasonably similar in
Adelaide (33.0%), Perth (31.0%), Hobart (34.1%) and Darwin (31.2%).
The deterioration in housing affordability in 2002/03 and 2003/04 was most pronounced in
Sydney and Brisbane. A substantial difference in affordability between Sydney and Melbourne
emerged over the course of 2002/03 and 2003/04, as affordability in Sydney deteriorated
greatly, but was comparatively static in Melbourne. Despite affordability improving slightly in
both capitals over 2004/05, the margin was still significant. This development has been due to
growth in Victorian average earnings being much greater than in New South Wales over this
period, while house price growth was weaker.
On the other hand, Brisbane’s housing affordability advantage relative to Melbourne has greatly
diminished over the last three years. Since 2002/03, growth in average earnings in Queensland
has exceeded that in Victoria, but the Brisbane median house price rose by 69% from June 2002
to June 2005, while the Melbourne median house price only increased by 10% over the same
period. As a result, Brisbane’s advantage as at June 2005 had diminished to be at its lowest
level since June 1995.
As at June 2005, the affordability of home loans improved in Sydney (58.8%),
Canberra (36.4%) and Melbourne (42.8%), stabilised in Brisbane (39.6%) and Darwin (31.9%),
but worsened in Adelaide (35.5%), Perth (34.0%) and Hobart (34.8%).
As at June 2006, affordability deteriorated slightly in Sydney as a small decrease in the median
house price was offset by an interest rate rise in May 2006. Affordability deteriorated marginally
in Melbourne, Brisbane, Hobart and Canberra due to a combination of price increases and the
interest rate rise. The greater changes in affordability were obviously in Perth and Darwin due
to strong growth in property prices.
Interest rate increases in August and November 2006, combined with solid price growth in most
cities caused affordability to deteriorate significantly in 2006/07. Sydney was the only major city
to not experience this, with the level of affordability remaining relatively constant. The gap
between Sydney and cities like Melbourne and Perth has continued to close.
By June 2008, affordability has deteriorated further. The overwhelming driver of this has been
the increased cost of borrowing for households. The variable housing rate has increased by
approximately 1.4% in 2007/08. This represents a significant burden for the average household
budget.
We think that affordability in Sydney will dip to lows not seen since the early 90’s. This level of
affordability is expected to stay through to 2011. Most major centres are expected to behave in
a similar fashion. Perth is the exception as robust wage growth is expected to improve
affordability by June 2011.
Affordability in Sydney has moved back to the level observed at the peak of the market in
2003/04. This situation means that there is little upside in the median house price until housing
rates come down.
Following large price increases, affordability in Melbourne, Brisbane and Darwin have
approached the level that prevailed in Sydney when prices peaked in 2003. As a result, we
think that only modest price growth will be sustained with interest rates at current levels.
The most affordable cities are Adelaide and Hobart. Their situation provides some upside to
price growth for these cities in 2008/09. However, dwelling construction is running at a strong
pace in both cities (relative to underlying demand), so the degree of housing undersupply is not
expected to be a significant factor for the residential property market in 2010 and 2011.
We expect that affordability will deteriorate marginally in the eastern capital cities over the
course of 2010/2011.
Our forecasts imply that housing affordability stabilises at an adverse level by comparison with
the average over the 15 years to 2006/07. A key rationale for this outlook is that the
unemployment rate has fallen to a very low level, which means that average household income
has risen more strongly than average wages growth. In addition, we believe that several cities
are struggling to maintain dwelling construction at a pace that is consistent with underlying
demand. This environment means that there is a higher premium placed on access to existing
dwellings, which will be reflected in acceleration of residential rentals, and also contribute to the
growth in residential property prices to 2011.
The affordability of housing finance is a necessary condition for an investor to enter the
residential property market. However, affordability on its own is not enough to determine
whether housing is a good investment. A good investment decision is based on a comparison
of the cost of funds (real interest rates) or opportunity costs with the expected real returns (real
capital growth and rent).
The principal reason for the sensitivity of residential property markets to interest rate movements
is that strongly growing interest rates limit the capacity to finance housing investment. Likewise,
when interest rates fall, the size of an affordable loan is higher for any given income.
The cost of meeting repayments for a 25 year loan covering, say, three-quarters of the value of
a median-priced house provides a useful measure of home loan affordability. Table 2.6 shows
mortgage repayments for such loans at current standard variable housing loan interest rates as
at June 30th each year, expressed as a percentage of total full-time earnings. It should be
noted that, to provide a better indication of housing affordability, full time earnings are being
calculated at the state level.
This table does not necessarily represent the typical situation for all home buyers. Many factors
including the price of the property, amount of deposit, and income (especially two income
families) can affect individuals. Rather, it is a guide to changes in affordability, and variations
between states over time.
Over the past twenty years, the percentage of income allocated to mortgage repayments was at
its highest level and affordability was at its lowest level, across all states in 1989–1990. This
substantial deterioration was caused by a huge leap in house prices from June 1988 combined
with record high interest rates. The housing rate remained as high as 17% between June 1989
and March 1990.
Affordability was at its worst in Sydney (86.7%), Melbourne (68.8%), Canberra (48.6%),
Perth (48.8%), Adelaide (45.9%), and Hobart (38.7%) in June 1989. For Brisbane (49.3%) and
Darwin (37.3%), affordability fell to its lowest level in June 1990.
The steady fall in the housing interest rate to 8.75% from September 1993 to August 1994, as
well as growth in nominal wages, raised home loan affordability to its most favourable position
since the mid-1980s. By June 1994, mortgage repayments as a percentage of income had
fallen to 43% in Sydney, 34% in Melbourne, 30% in Brisbane, 26% in Adelaide, 27% in Perth,
25% in Hobart, 31% in Canberra and 31% in Darwin.
Despite solid growth in wages and minimal change in the level of median house prices, interest
rate rises in late 1994 (10.5% by December 1994) reduced home affordability marginally across
all capital cities by June 1995.
However, the percentage of income allocated to mortgage repayments decreased and remained
extremely low over the 1997 to 1999 period, during which all capital cities experienced their
most affordable housing prices since the early 1980s. Interest rates during this period had fallen
to 6.50% by December 1998, the lowest level in over twenty-five years. Home affordability was
at its most favourable position in Melbourne (29.6%) and Sydney (38.9%) at June 1997, in
Brisbane (22.4%), Perth (21.5%), Hobart (17.7%) and Adelaide (19.6%) at June 1998, and in
Canberra (21.2%) and Darwin (25.3%) at June 1999. These were generally the best
affordability levels since the early 1980s and, in some capitals, longer.
Affordability in Sydney (50.3%) and Melbourne (42.3%) by June 2000 had dropped to its most
challenging level since 1991. It was reduced by strong growth in median house prices from
1997, as well as by rises in housing rates from November 1999 to August 2000, despite strong
wages growth.
The fall in the housing interest rate, to 6.8% in 2000/01, resulted in home affordability improving
dramatically in each capital city by June 2001. However, strong price growth in 2001/02 across
all capital cities outweighed the 0.5% drop in interest rates and wages growth in this year,
resulting in home affordability again deteriorating. Further price rises in 2002/03 across the
board resulted in further deterioration in home loan affordability.
While price growth slowed across all capital cities over 2003/04, interest rate rises in December
quarter 2003 resulted in home affordability deteriorating further by June 2004. Affordability was
particularly challenging in Sydney (65.0%), far ahead of Melbourne (43.8%), Brisbane (39.4%),
and Canberra (41.6%). On the next level down, affordability was reasonably similar in
Adelaide (33.0%), Perth (31.0%), Hobart (34.1%) and Darwin (31.2%).
The deterioration in housing affordability in 2002/03 and 2003/04 was most pronounced in
Sydney and Brisbane. A substantial difference in affordability between Sydney and Melbourne
emerged over the course of 2002/03 and 2003/04, as affordability in Sydney deteriorated
greatly, but was comparatively static in Melbourne. Despite affordability improving slightly in
both capitals over 2004/05, the margin was still significant. This development has been due to
growth in Victorian average earnings being much greater than in New South Wales over this
period, while house price growth was weaker.
On the other hand, Brisbane’s housing affordability advantage relative to Melbourne has greatly
diminished over the last three years. Since 2002/03, growth in average earnings in Queensland
has exceeded that in Victoria, but the Brisbane median house price rose by 69% from June 2002
to June 2005, while the Melbourne median house price only increased by 10% over the same
period. As a result, Brisbane’s advantage as at June 2005 had diminished to be at its lowest
level since June 1995.
As at June 2005, the affordability of home loans improved in Sydney (58.8%),
Canberra (36.4%) and Melbourne (42.8%), stabilised in Brisbane (39.6%) and Darwin (31.9%),
but worsened in Adelaide (35.5%), Perth (34.0%) and Hobart (34.8%).
As at June 2006, affordability deteriorated slightly in Sydney as a small decrease in the median
house price was offset by an interest rate rise in May 2006. Affordability deteriorated marginally
in Melbourne, Brisbane, Hobart and Canberra due to a combination of price increases and the
interest rate rise. The greater changes in affordability were obviously in Perth and Darwin due
to strong growth in property prices.
Interest rate increases in August and November 2006, combined with solid price growth in most
cities caused affordability to deteriorate significantly in 2006/07. Sydney was the only major city
to not experience this, with the level of affordability remaining relatively constant. The gap
between Sydney and cities like Melbourne and Perth has continued to close.
By June 2008, affordability has deteriorated further. The overwhelming driver of this has been
the increased cost of borrowing for households. The variable housing rate has increased by
approximately 1.4% in 2007/08. This represents a significant burden for the average household
budget.
We think that affordability in Sydney will dip to lows not seen since the early 90’s. This level of
affordability is expected to stay through to 2011. Most major centres are expected to behave in
a similar fashion. Perth is the exception as robust wage growth is expected to improve
affordability by June 2011.
Affordability in Sydney has moved back to the level observed at the peak of the market in
2003/04. This situation means that there is little upside in the median house price until housing
rates come down.
Following large price increases, affordability in Melbourne, Brisbane and Darwin have
approached the level that prevailed in Sydney when prices peaked in 2003. As a result, we
think that only modest price growth will be sustained with interest rates at current levels.
The most affordable cities are Adelaide and Hobart. Their situation provides some upside to
price growth for these cities in 2008/09. However, dwelling construction is running at a strong
pace in both cities (relative to underlying demand), so the degree of housing undersupply is not
expected to be a significant factor for the residential property market in 2010 and 2011.
We expect that affordability will deteriorate marginally in the eastern capital cities over the
course of 2010/2011.
Our forecasts imply that housing affordability stabilises at an adverse level by comparison with
the average over the 15 years to 2006/07. A key rationale for this outlook is that the
unemployment rate has fallen to a very low level, which means that average household income
has risen more strongly than average wages growth. In addition, we believe that several cities
are struggling to maintain dwelling construction at a pace that is consistent with underlying
demand. This environment means that there is a higher premium placed on access to existing
dwellings, which will be reflected in acceleration of residential rentals, and also contribute to the
growth in residential property prices to 2011.
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Table 2.6: Home Loan Affordability ”” Monthly Mortgage Repayments as a Percentage of Total
Full-Time Earnings
As at 30th
June Sydney Melbourne Brisbane Adelaide Perth Hobart Canberra Darwin
1988 50.1 47.7 29.6 33.4 27.7 30.5 36.4 32.6
1989 86.7 68.8 45.4 45.9 48.8 38.7 48.6 38.3
1990 79.5 63.0 49.3 44.9 42.0 38.6 45.1 39.6
1991 58.8 49.0 38.9 36.5 30.5 30.9 39.0 32.5
1992 49.1 38.2 34.1 28.9 26.4 25.4 35.3 28.8
1993 45.0 37.0 31.8 26.6 26.1 26.4 33.6 34.9
1994 43.5 33.7 29.8 25.7 27.0 25.2 30.6 32.7
1995 47.9 35.9 33.1 28.4 29.8 27.0 32.5 41.2
1996 44.8 34.0 30.1 25.6 26.9 26.4 30.5 35.7
1997 38.9 29.6 23.8 20.4 22.5 18.7 23.3 29.7
1998 40.3 32.2 22.4 19.6 21.5 17.7 21.5 27.4
1999 41.6 34.9 23.1 19.7 21.7 18.5 21.2 25.3
2000 50.3 42.3 25.8 22.5 24.6 22.3 25.9 30.0
2001 47.2 42.6 23.6 21.6 22.7 18.4 25.2 26.5
2002 55.4 42.0 25.3 23.7 23.6 18.1 26.3 26.4
2003 59.9 42.7 30.4 28.7 25.4 24.6 35.0 25.5
2004 65.0 43.8 39.4 33.0 31.0 34.1 41.6 31.2
2005 58.8 42.8 39.6 35.5 34.0 34.8 36.4 31.9
2006 59.8 44.2 40.2 35.5 43.6 36.6 38.4 41.5
2007 59.9 48.8 45.2 39.4 48.8 39.8 43.9 47.7
Full-Time Earnings
As at 30th
June Sydney Melbourne Brisbane Adelaide Perth Hobart Canberra Darwin
1988 50.1 47.7 29.6 33.4 27.7 30.5 36.4 32.6
1989 86.7 68.8 45.4 45.9 48.8 38.7 48.6 38.3
1990 79.5 63.0 49.3 44.9 42.0 38.6 45.1 39.6
1991 58.8 49.0 38.9 36.5 30.5 30.9 39.0 32.5
1992 49.1 38.2 34.1 28.9 26.4 25.4 35.3 28.8
1993 45.0 37.0 31.8 26.6 26.1 26.4 33.6 34.9
1994 43.5 33.7 29.8 25.7 27.0 25.2 30.6 32.7
1995 47.9 35.9 33.1 28.4 29.8 27.0 32.5 41.2
1996 44.8 34.0 30.1 25.6 26.9 26.4 30.5 35.7
1997 38.9 29.6 23.8 20.4 22.5 18.7 23.3 29.7
1998 40.3 32.2 22.4 19.6 21.5 17.7 21.5 27.4
1999 41.6 34.9 23.1 19.7 21.7 18.5 21.2 25.3
2000 50.3 42.3 25.8 22.5 24.6 22.3 25.9 30.0
2001 47.2 42.6 23.6 21.6 22.7 18.4 25.2 26.5
2002 55.4 42.0 25.3 23.7 23.6 18.1 26.3 26.4
2003 59.9 42.7 30.4 28.7 25.4 24.6 35.0 25.5
2004 65.0 43.8 39.4 33.0 31.0 34.1 41.6 31.2
2005 58.8 42.8 39.6 35.5 34.0 34.8 36.4 31.9
2006 59.8 44.2 40.2 35.5 43.6 36.6 38.4 41.5
2007 59.9 48.8 45.2 39.4 48.8 39.8 43.9 47.7
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Volume of Houses on the Melbourne Market is significantly down from previous years.
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do you have a link or similar to verify that please?
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http://www.reiv.com.au/home/inside.asp?ID=142&pnav=141
this is last weekend for melb - personally i check sundays age every week and volumes have been significantly down for last 3 months (5% - 40% week to week est)
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thankyou very much......... can understand winter vols being low as is the case usually yearly ...... intresting that the actual listings havent actually risen above the normal spring/summer selling season ........kinda contrary to some of the posts here,,,,,,,,
cheers
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Wow. Can you link source please?
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thanks for that , intresting reading
by the way im only a nun and no one else
thankyou
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We have a serious undersupply here in Melbourne, so a flood of property would be a welcome occurance for those needing to buy.
Victoria had an estimated stock deficiency of 4,800 dwellings as at June 2006. This is estimated to have shifted to a 9,000 deficit as at June 2008. Underlying demand is expected to increase significantly over the 2009–2013 period, averaging 46,100 dwellings per annum. The growth in underlying demand is anticipated to steadily raise the dwelling stock Victorian stock
deficiency, increasing it to 14,500 dwelling by June 2011.
This is all great news for property in Vic, but who knows if the financial issues of the day will overpower the basic economic supply/demand principles.
I'd love to see the US regulate their morgtage industry (we dont really need to here) and all markets ban short term trading (must hold for 3 months) or put a 5% stamp duty on shares - then we can clear out all the Volatility Vultures, Options traders and spruikers - only long termers would be left. Buying a stock would be like buying a property - lifetime investment.
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Wow. Where do you get these figures from?
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sorry dont agree , short sellers , short term traders just another piece of the markets mechanics , we buy and trade shares for that very reason LIQUIDITY
some invest and thats fine as i do to , but i also trade short and long to pay for the everyday things in life
actually a bit of a trader in property (residential) and have been for years , i do have a "family " home which is not tradeable but all the rest is just another means to an end in my book , all makes a buck .....why not eh
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