House prices to keep falling for years

[Indie]

G'day

Robots, you seem to be winning the argument for now IMO. But that's only because the media in general aren't fully reporting the negative aspects of what's happening in the market. The pullback in prices will inevitably filter through slowly as tighter credit chokes the market.

I'm settling on Friday and relived I'm getting out. I sold 5 months ago on an extended settlement. My real estate agent freely admits the market has dropped 10-15% in that time. I believe her, but then again she's probably trying to convince me to get in quick while there's "a lull in the market".

good luck
Indie

 

[MR.]

Robots... Property Guy,
Some good figures put there "for" property. Lower interest rates and people can't help themselves. It is something to think about but if people see property falling and jobs going who cares about lower interest rates? Oh yes the ones already purchased and the new home owners. Good rental returns vs interest but how hard is it going to be to get rent out of someone with no job? Is that why shares are traded? ie: Sellers think the price is going to drop so they sell! (and also Stamp duty should be on shares)

Always been a fan of property but as I go to auction next week I feel I am already a little too late. Back on the 30/1/08 (Re: Imminent and severe market correction thread) I claimed it was time to sell the house. During the marketing on this property (9 months after 30/1/08) the share market has fallen apart. Doh... and 6 weeks ago I bought the new family home, down sized. Interest rates are falling fast now, must be good for property! But buyers are few and far between just now. Perhaps when the smoke settles and interest rates are even lower, more property buyers will appear. (They better)

But isn't that what happened in the late 80's the property market remained afloat for some time after stocks dropped and then million dollar homes dropped to 600K and 250K homes dropped to 200K. The average home didn't fall but the average home is not $140K any more. If property remains at the same price (at best) for years to come, why not just stick it in the now government secured banks and get some small interest. But then again buy some property and rent it out and the return might be far greater than the banks! Question is will property fall in value? Going with my gut...... commited anyway.

Is property, shares in slow motion?

 

[MrBurns]

AAP

22/10/2008 4:53pm Email to a friend Print article


Australia's jobless rate will more than double between now and 2010, when over one million people are expected to be out of work, as the global economic slowdown weighs on China, a leading international bank says.

JPMorgan Australia's chief economist Stephen Walters said a slowdown in China's economic growth will be detrimental to the creation of jobs in Australia in the next two years.

"We now expect the jobless rate to more than double to nine per cent in late 2010, from the current 4.3 per cent," Mr Walters said.

"Softer growth in one of Australia's leading export destinations means Australia's export volumes will be lower, as will be the terms of trade.

"That said, on our forecasts, there will be one million unemployed Australians by the second half of 2010."

Gee ......didn't Steven Keen say that the other day ??????
Seems like he may not be far off the mark in this and therefore other predictions, run hide sell sell sell.................

 

[CamKawa]

Here we go, dodgy real estate figures exposed on Media Watch. Click on the video link.

Rental Figures Squeezed

 

[robots]

hello,

my girlfriend bought me the wrong size thongs today can we link that in here someway as well please,

anybody like pepperoni on there pizza?

thankyou
robots

 

[nunthewiser]

hello,

my girlfriend bought me the wrong size thongs today can we link that in here someway as well please,

anybody like pepperoni on there pizza?

thankyou
robots

personally always thought thongs on a bloke were a bit off especially if they a little too tight...... they not the leapord pattern ones are they ?

nah gimme salami anyday



cheers

 

[MrBurns]

Gee ......didn't Steven Keen say that the other day ??????
Seems like he may not be far off the mark in this and therefore other predictions, run hide sell sell sell.................

I'll just bring this down a bit so no one misses it. looks like Steven Keen was right, yes right, so if he's also right on real estate it's stuffed.

 

[robots]

hello,

gee what s surprise: SQM Research good plug CamKawa

sent this guy an email and will now send another one, never heard from the expert,

oh yes but this guy is credible isnt he? any vested interest from him?

another one in with Keen, sell sell, get rid of debt,

man money is getting cheaper, way cheaper brothers, 1% in recent months and more to come in November, my own inflation stats for housing costs indicate a 7% drop, fantastic

anyone got a nice letter from the landlord with 7% drop or anything for that matter,

would just like to take this time to thank the Government and the RBA for the hard work they are doing in keeping this country a fine place

thankyou
robots

 

[MrBurns]

Originally Posted by MrBurns
Gee ......didn't Steven Keen say that the other day ??????
Seems like he may not be far off the mark in this and therefore other predictions, run hide sell sell sell.................

I'll just bring this down a bit so no one misses it. looks like Steven Keen was right, yes right, so if he's also right on real estate it's stuffed.

Hate to rub it in but I'll bring this down again so no one misses it. looks like Steven Keen was right, yes right, so if he's also right on real estate it's stuffed.

 

[CamKawa]

Down house prices go!

9:36 AM, 22 Oct 2008

Tony Boyd

Lenders get tough

Anecdotal evidence collected from a range of participants in the housing sector suggests banks are tightening their lending criteria to mitigate the risks of being caught as the economy slows and house prices fall.

The anecdotes point to banks applying much tougher loan to valuation ratios (LVR) and demanding higher levels of income to cover loan repayments.

Competition for customers among the major lenders is said to be much less intense than earlier this year as banks become more selective in their approach to lending.

At a time when the emphasis is on building capital ratios rather than striving for asset growth, banks have become more cautious in the loans they write.

It is believed the more conservative stance is in anticipation of rising loan defaults.

Home loan defaults, which have been rising sharply over the past year, tend to lag interest rate increases by about 12 months. Loan delinquencies in the latest bank accounts would relate to Reserve Bank rate rises from November last year. The RBA only stopped raising interest rates in March this year.

Deteriorating conditions were seen in National Australia Bank's results, which showed the bank's 90 days past due retail delinquency rate rose 10 basis points to 81 basis points between March and September due to rising mortgage delinquencies in Australia and New Zealand.

The biggest impact from tighter lending standards is being felt by the self-employed who previously relied upon non-bank lenders offering low-doc loans. Low-doc loans only comprise about 1 or 2 per cent of all outstanding home loans, but it is believed the tougher lending criteria are being applied to full-doc borrowers.

One anecdote involved a tradesman on the NSW Central Coast with a low doc loan who had an LVR of 80 per cent and wanted to increase the loan amount to fund expansion of his business. A major bank told him that he could have the money provided the LVR was lowered to 70 per cent. This was not possible because his house had fallen in value.

Industry sources said low-doc lending was still occurring but that LVRs had been wound back to as low as 65 per cent.

The RBA noted in its recent financial stability review that credit had become less available for higher risk borrowers.

Small businesses that had previously relied on non-conforming home loans with interest rates of 9.5 per cent to finance their businesses are being told by major banks to shift to business loans secured by home mortgages but with interest rates of 12 per cent.

Another anecdote involved an architect who had pre-approval for a full-doc loan with an LVR of 95 per cent. When he tried to roll the loan over while he continued his search for a house, the bank changed the LVR to 80 per cent.

One factor that is said to have influenced the banks is the tougher conditions included in lenders' mortgage insurance policies.

It is not clear whether the tightening of credit criteria is being confined to particular geographic areas or particular types of assets, as occurred several years ago when lending for inner city apartments had a maximum LVR of 70 per cent.

Financial results from Westpac, due next week, should provide a test of whether or not tougher lending criteria actually help to reduce default rates.

Westpac moved into a tightening bias 18 months ago. It made adjustments to various factors including serviceability levels and property valuation requirements. A bank spokeswoman said lending criteria were reviewed constantly as part of sound business management.

source: http://www.businessspectator.com.au/bs.nsf/Article/Lenders-get-tough-KMUB6?OpenDocument&src=sph

​

 

[robots]

personally always thought thongs on a bloke were a bit off especially if they a little too tight...... they not the leapord pattern ones are they ?

nah gimme salami anyday



cheers

hello,

i love pepperoni, pineapple and tomato sauce

sometimes I go extra pepperoni if its an extra special night like tonite for instance,

gee, they forgot to discuss what people are doing for christmas in that article CamKawa

thankyou
robots

 

[DJZ]

personally always thought thongs on a bloke were a bit off especially if they a little too tight...... they not the leapord pattern ones are they ?

nah gimme salami anyday



cheers

LOL

Those leopard pattern ones always look Good

 

[xoa]

man money is getting cheaper, way cheaper brothers, 1% in recent months and more to come in November, my own inflation stats for housing costs indicate a 7% drop, fantastic

Yeah, interest rates will fall in coming months, but what about this time next year, or ten years from now? Twenty years from now?

:

Most people are intelligent enough not to commit themselves to a massive long-term debt on the basis of short-term interest rate movements. Intelligent people also look at the underlying value - no point buying an overpriced asset regardless of how "cheap" the debt is.

 

[robots]

hello,

i have been riding the basic variable wave for 10yrs, and hope to do the same for the next 10

IR is not a huge consideration for purchasing property, income is the main factor and there seems to be an awful lot who use the internet that cannot afford property,

your income is where you make the most "risk free" $ in life and the sooner you embrace it the better,

question time is open

thankyou
robots

 

[MrBurns]

Boy that Steven Keen is spot on isn't he ?

Forecast 1M unemployed and now that's backed up by J P Morgan after the Govt said 200k ..........pish posh to them, rank amateurs. they should consult Mr Keen for advice.

I wonder what Mr Keen has to say about property ? He seems to have the real answers.

 

[gfresh]

gee, they forgot to discuss what people are doing for christmas in that article CamKawa

Spending is one thing they won't be be doing.. And in Jan/Feb, after they've worked this out, retailers will start laying off staff. Happy New Year!

 

[robots]

hello,

gee you on the ball tonite Mr Burns

whats your favourite Mr Burns, pepperoni or salami like nunthewiser?

unemployment is still at just under 5%

thankyou
robots

 

[mantronic]

Being a real estate agent I know that prices always go up and will continue to do so.

But the level of doom and gloom around in the press is laughable.

This is the worst example

"Why real estate spending could make Australia the new Iceland"

http://www.brisbanetimes.com.au/articles/2008/10/19/1224351113115.html

After quoting Redeker, the Telegraph's global business columnist, Ambrose Evans-Pritchard, weighed in with his own commentary: "The immediate problem for Australia's banks is that they gorged on offshore US dollar markets to fund expansion because the interest costs were lower. They were playing on a huge scale with leverage. European banks face much the same problem as dollar liabilities come back to haunt, but Australian lenders have pushed their luck even further."

Gabriel Stein, of Lombard Street Research, weighed in with this, after noting that Australian household debt had reached 177 per cent of gross domestic product, almost a world record: "It is amazing that in the midst of the biggest commodity boom ever seen they have still been unable to get a current account surplus. They have been living beyond their means for 10 years. What worries me is that productivity growth has been very low: they have been coasting after their reforms in the 1990s."

The global financial world is watching the Australian dollar because it holds a key to the great unanswered question of this uncertain era: will the global market punish a currency for its declining interest yield? Or will it reward a currency because of the soundness of its economy? Central banks are acutely interested in the answer.

Evans-Pritchard thinks the early signs are hopeful that the answer is the good one, that nations will be rewarded for having sound economies. But he does not believe Australia can escape the consequences of excess: "Australia has allowed its net foreign liabilities to reach 60 per cent of GDP during a decade-long boom, twice the level of the US. The country will, in effect, have to pay 4 per cent of GDP in the form of rents to foreign asset-holders as the bill for such extravagance falls due."

The bill is falling due. Earlier in the year Australians travelling in Europe would have paid about $1.50 for every euro spent. Today they need $2.10. The Aussie dollar is weak again, despite all the luck of the China boom. This raises a number of awkward questions. Did the lucky country became the greedy country? Did it fail to sufficiently embark on a program of nation-building during the resources boom? Was most of the bonus redistributed as tax cuts, which were spent chasing bigger mortgages, bigger homes, new cars and general consumption, stimulating short-term economic growth but not enough on long-term productivity and higher savings?

During 17 years of unbroken economic expansion and a 10-year commodities boom, it took a lot of people, borrowing a lot of money, taking a lot of unproductive risk, to get to where we are today: a nation with excessive debt and excessive vulnerability to external circumstances barely within our control.

 

[MrBurns]

hello,

gee you on the ball tonite Mr Burns

whats your favourite Mr Burns, pepperoni or salami like nunthewiser?

unemployment is still at just under 5%

thankyou
robots

Good evening Robots, I like salami, but it doesnt like me very much.

I wonder what Steve Keen likes ? Perhaps to have some backup for his forecasts, unless of course J P Morgan are scaremongers too ?

Ahh lovely evening here.

 

[mantronic]

Good evening Robots, I like salami, but it doesnt like me very much.

I wonder what Steve Keen likes ? Perhaps to have some backup for his forecasts, unless of course J P Morgan are scaremongers too ?

Ahh lovely evening here.

All these professors and experts saying prices will fall, but apart from a slight dip this year things are going great guns. If you want to know about property ask a taxi driver - they always have the inside word and they will tell you its upward and onward. These educated people let their book lerning get in the way of a good boom