House prices to keep falling for years

[lakemac]

thanks for the reply robots.
I always enjoy your posts

Anyone else care to put up some hard data so we can all learn?

 

[Julia]

Or as a middle ground make 2 separate threads and keep them separate.

No, that simply wouldn't work. A comment only makes sense in sequential reading as it responds to an earlier one. It's fine the way it is.

 

[nunthewiser]

No, that simply wouldn't work. A comment only makes sense in sequential reading as it responds to an earlier one. It's fine the way it is.

totally agree . 2 sides to every discussion of worth and if u remove one side ya just dont have a discussion worth listening too

 

[Ageo]

I believe some good country properties would be interesting for cash flow..... like this 1

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007347763
2 bedroom cottage, which you can pick up for $74,000 and with 20% down that would mean you would have to come up with $14,800.....

The expected rents are $150 p/w so gross rent annual would be $7800, lets say $1500 went to expenses and your left with $6000 before interest and tax. $59,200 (your loan) @ 7% interest would = $4144 in interest.

$6000 - $4144 = $1856p/a

Cash on cash return (cash outlayed to cash earnt) would = roughly 13%p/a (but when you account for agent fee's solicitor fee's etc.. it would bring it down a tad)

Theres always money to be made in any market

Lakemac here is some rough figures i have done (posted in here previously) to show there is some potential cashflow properties out there..... i havent figured in everything but you get the idea that this 1 has the potential to be an easy 10% cash on cash return (steve mcknights 0 to 130 properties book was handy).

Anyways for me personally when buying for growth unless its at a major discount i would just develop a batch instead (as your building the dwelling at a major discount compared to buying it).

Anywayz some food for thought as there is alot of bitching going on in here

 

[gfresh]

Have you been to Dimboola Ageo? It's been a few years since I've been there, but if I remember it was a dying town out in the middle of nowhere, ever since the highway skirted it. Did not at all a vibrant town to me. It's all good having cheap property, but you have to have tenants who want to live there. I don't know, maybe you know more about the area, but those are just my impressions from the past.

 

[Ageo]

Have you been to Dimboola Ageo? It's been a few years since I've been there, but if I remember it was a dying town out in the middle of nowhere, ever since the highway skirted it. Did not at all a vibrant town to me. It's all good having cheap property, but you have to have tenants who want to live there. I don't know, maybe you know more about the area, but those are just my impressions from the past.

No gfresh never been there although it does have the western hwy passing by (you just need to exit).... this was a simple example and you will find alot of people are moving from the cities to the tree change (regional) as its cheaper etc....

There are many places in NSW (young for instance) you can pick up places under 100k with good rental yields (the population is large for a country town).

And since we get about 300,000 immigrants per yr (if my figures are right) regional areas are becoming more popular (not for growth as such but rental yields)

 

[gfresh]

I think the biggest mistake by the realestate agents, investment property kings, and whoever else that trawls this thread is assuming that everybody that is discussing property negatively in here at the moment:

a) Hates property with a passion
b) Thinks property is a poor investment long-term
c) Is "too poor" to be able to purchase one (6 figures in the bank thanks, I'm fine)

There is a time for everything, cycles are cycles, and when people have a choice of when to enter (or leave) the market they'll choose the time they think is right. I don't think that time is now, right now for lots of reasons put forward in here.

Global recession is coming - US, UK, Japan, Europe, China may soon be experiencing what may seem like a recession.. People only need to half read some of the overseas news sources to see how badly this crisis is playing out. It seems most property investors like to ignore them and dismiss the rest of the world as not being applicable to Australia. Whatever the worst beliefs that have been put forward have been met so far. Even outrageous claims have turned out to become true.

The world's largest investment banks falling over? 95% of people would have laughed at you 2 years ago if you had even tried to suggest such a thing.

We're an island, we're insulated somewhat, but the time will come, is coming (speak to some small businesses out there), for the world economic downturn to hit our economy.

JP Morgan coming out and predicting 1M job losses coming up is in stark contrast to the conservative economists views out there, often sponsored by the major banks mind you. I wouldn't dismiss such estimates so quickly, as the conservative viewpoints have proven to be the incorrect ones so far.

The spin talk all seems to sound like the one put forward by those with shares 12 months ago. Lots of logical arguments as to why this was a never-ending super cycle, lots of nice theories that do make sense, but in the end, a big fail as 12 months later we're heading for 2004 share market levels.

Those perma-bulls that seem to believe that property prices can never ever fall, have plenty of nice charts and theories that the rules are somehow different, may be heading towards exactly the same mistake.

We can all just watch and wait and see if this proves to be correct or not.

There is plenty of caution, even put forward by those in the property investment community if people read around a bit more.

 

[Ageo]

Couldnt agree more gfresh, my dad's builder who builds alot of homes is pulling back production... many of my customers (jewellers) cant even pay a small debt, many of the small business's that are over capitalized will get slammed.....im hearing it everywhere, i.e people in westfields are still paying crazy rents but arnt generating the revenue to keep up.

And i also agree now isnt the time (for me anyway) to buy property or shares (as i believe the worst is yet to come) but when it all falls through the roof perhaps 90% of the population will not be able to afford investment (they will be in survival mode) and thats the time to look at entering..... (of course my opinion and shouldnt be taken as advice).

 

[ROE]

Watch a doc made in US about three years ago called
in debt we trust... they already know 2007/2008 is the year America fall over.

Your home equity is a form of debt and if you tape in to spend or fuel further purchase of more property, you are in for a rude awakening.

Think about it ...bought a house $100K gone up to 200K
yipe I'm 100K richer...let cash it out ...and do something about it but the reality is you just put another 100K debt on your balance... it's ok when personal debt is low but we are now reaching the absolutely limit...and there is only one way and that is down...everything in general not just housing...all asset will be reprice and those who leverage will be the hardest hit of them all...and of course many will go bankrupt..they didn't believe it then until it happen, Australia doesn't believe in it now... until 2010

 

[ROE]

I think the biggest mistake by the realestate agents, investment property kings, and whoever else that trawls this thread is assuming that everybody that is discussing property negatively in here at the moment:

a) Hates property with a passion
b) Thinks property is a poor investment long-term
c) Is "too poor" to be able to purchase one (6 figures in the bank thanks, I'm fine)

There is a time for everything, cycles are cycles, and when people have a choice of when to enter (or leave) the market they'll choose the time they think is right. I don't think that time is now, right now for lots of reasons put forward in here.

Global recession is coming - US, UK, Japan, Europe, China may soon be experiencing what may seem like a recession.. People only need to half read some of the overseas news sources to see how badly this crisis is playing out. It seems most property investors like to ignore them and dismiss the rest of the world as not being applicable to Australia. Whatever the worst beliefs that have been put forward have been met so far. Even outrageous claims have turned out to become true.

The world's largest investment banks falling over? 95% of people would have laughed at you 2 years ago if you had even tried to suggest such a thing.

We're an island, we're insulated somewhat, but the time will come, is coming (speak to some small businesses out there), for the world economic downturn to hit our economy.

JP Morgan coming out and predicting 1M job losses coming up is in stark contrast to the conservative economists views out there, often sponsored by the major banks mind you. I wouldn't dismiss such estimates so quickly, as the conservative viewpoints have proven to be the incorrect ones so far.

The spin talk all seems to sound like the one put forward by those with shares 12 months ago. Lots of logical arguments as to why this was a never-ending super cycle, lots of nice theories that do make sense, but in the end, a big fail as 12 months later we're heading for 2004 share market levels.

Those perma-bulls that seem to believe that property prices can never ever fall, have plenty of nice charts and theories that the rules are somehow different, may be heading towards exactly the same mistake.

We can all just watch and wait and see if this proves to be correct or not.

There is plenty of caution, even put forward by those in the property investment community if people read around a bit more.

I love property with a passion that why I own my own home and no debt and that equity the damn banks and financial people keep advising me to use and buy more property and shares...

I said no thanks...my home is not an ATM it's a place I like to live and where my kids grow up. I don't want anyone to pull it guts out should **** happen in the world

I'm now thankful I stick by those decision, maybe not as rich as some but debt free and have a better night sleep

 

[ROE]

Couldnt agree more gfresh, my dad's builder who builds alot of homes is pulling back production... many of my customers (jewellers) cant even pay a small debt, many of the small business's that are over capitalized will get slammed.....im hearing it everywhere, i.e people in westfields are still paying crazy rents but arnt generating the revenue to keep up.

And i also agree now isnt the time (for me anyway) to buy property or shares (as i believe the worst is yet to come) but when it all falls through the roof perhaps 90% of the population will not be able to afford investment (they will be in survival mode) and thats the time to look at entering..... (of course my opinion and shouldnt be taken as advice).

nothing wrong with keeping that cash in the bank at 7% and wait for the perfect pitch to come to you .

The fact is most true millionaires (the one that survive the boom and bust) dont have much debt at all

they are frugal lots and save and invest slow and steady years in years out and economic cycles doesn't affect their life style or their money much.

Maybe now is the time to read a book called "the millionaire next door" ...

 

[Ageo]

nothing wrong with keeping that cash in the bank at 7% and wait for the perfect pitch to come to you .

...

Something just doesnt sit right with me regarding our banks...... i mean lets say your bank falls over (which is very achievable due to foreign lending) how many other people will do a bank run...... then id like to see the governments guarantee in action (people will storm the parliament house to demand their cash hehe).

 

[mantronic]

No, that simply wouldn't work. A comment only makes sense in sequential reading as it responds to an earlier one. It's fine the way it is.

Well what you call your opinion I call nonsense. You may not want to bicker about that just as not every property tycoon wants to bicker with property naysayers. For those that do you could set up a "property childish bickering" thread.

Anyway another day another profit turning renters dead money into my living money. Any more questions from the live under a bridge crew on the everlasting fountain of wealth that is property?

 

[spooly74]

Well what you call your opinion I call nonsense.

Here you go mate .. you can rant away to your hearts content there.

https://www.aussiestockforums.com/forums/showthread.php?t=9911&highlight=house+rising

 

[awg]

I like to keep things as simple as possible.

rising unemployment will mean many holders of single investment property especially, (and ppor) will no longer be able to service their negative gearing = more (forced) sellers.

rising UB + difficulty qualifying for tightened credit will mean less buyers.

more sellers + less buyers means prices fall.

these are basic assumptions, tell me were I am wrong.
Is there any sausage that thinks UB will not rise?

I believe that immigration plus undersupply of home construction, and rental supply, is holding up the market at the moment, that is saving us. I dont believe these factors can hold back the tide.

I talk to RE pros sometimes. Every single one of them tells me prices are falling hard.

Obviously there will be some small pockets that are not afflicted, but they will be few and far between

disclosure: I own my own home outright, and have 1 negative geared IP, which i wont sell unless forced to, and these views represent my opinions only. I am not a RE pro, but have bought and sold numerous properties over 20 yrs.

 

[mantronic]

Here you go mate .. you can rant away to your hearts content there.

https://www.aussiestockforums.com/forums/showthread.php?t=9911&highlight=house+rising

Sorry mate but until the consensus is separate threads us property experts are here to stay!

Did anyone buy thongs today?

 

[mantronic]

I like to keep things as simple as possible.

rising unemployment will mean many holders of single investment property especially, (and ppor) will no longer be able to service their negative gearing = more (forced) sellers.

rising UB + difficulty qualifying for tightened credit will mean less buyers.

more sellers + less buyers means prices fall.

these are basic assumptions, tell me were I am wrong.
Is there any sausage that thinks UB will not rise?

I believe that immigration plus undersupply of home construction, and rental supply, is holding up the market at the moment, that is saving us. I dont believe these factors can hold back the tide.

I talk to RE pros sometimes. Every single one of them tells me prices are falling hard.

Obviously there will be some small pockets that are not afflicted, but they will be few and far between

disclosure: I own my own home outright, and have 1 negative geared IP, which i wont sell unless forced to, and these views represent my opinions only. I am not a RE pro, but have bought and sold numerous properties over 20 yrs.

UB? Dont sweat the small stuff. Hold on buy more and end up richer than the alternative. You heard it here first. Stay tuned for more breaking news.

 

[ROE]

Something just doesnt sit right with me regarding our banks...... i mean lets say your bank falls over (which is very achievable due to foreign lending) how many other people will do a bank run...... then id like to see the governments guarantee in action (people will storm the parliament house to demand their cash hehe).

Well you don't have to keep your money in the bank, buy Government bonds ..currently 5 years bond get you 6.5%
nice and pretty close to risk free

When the government give a guarantee they protect depositor they WILL. It's not just Aussie money, it's also foreigners who has money in Australia.

if you pull a stunner and renege on your obligation the country not only suffer but also its people.

Russia default on its loan not long ago, look what happen
no one will invest in that country again, its people are starving even now after decades people are weary of Russia and all the money go to other country like China.

 

[Aussiejeff]

Interesting article today from The Australian...

------------------------

Mortgage pain to hit 1 million - survey
By Katherine Jimenez and Nick Perpitch October 23, 2008 06:46am

... Mortgage stress is predicted to hit a record high despite interest rate cuts.

* One million forecast to fall into mortgage stress
* 1 per cent rate cut won't make a difference
* Unemployment uncertainty leading factor

MORE than one million Australians are forecast to fall into mortgage stress by March next year - the worst rate ever - as rising unemployment, tumbling house prices and ballooning credit debt take their toll.

Even after factoring in a further 1 per cent cut in interest rates, the latest mortgage stress survey from Fujitsu Consulting is predicting a massive 42 per cent surge in "severe stressed" households to about 363,000, the highest number ever recorded by the survey.

At the heart of the mortgage stress is employment uncertainty.

The report found 15 per cent of households had experienced a reduction in overtime payments in the past three months, and 35 per cent of people employed by small businesses had seen their hours reduced.

"The findings are very concerning as it shows that despite the potential for more rate cuts in coming weeks, the spectre of falling employment is off setting the potential benefit," Fujitsu managing consulting director Martin North said.

The "double whammy" of unemployment and the higher cost of living were driving more people into stress, he said.

"This will lead to further house price reductions in many suburbs," Mr North warned.

Mortgage stress is tipped to rise 27 per cent to more than one million by March - that is based on a further 1 per cent decline in official cash rates and unemployment rising from 4.3 per cent to 4.7per cent.

If unemployment reached 5 per cent [some predictions are for 6% - aj], Mr North estimates stress levels would rise above 1.4 million. And the alarming predictions are not just confined to the battlers. Affluent stress is also on the rise due to the further stock market falls, margin calls and rising costs of living.

The Fujitsu report highlighted that a number of sea change regions - including the Gold Coast -were being hit by forced sales as superannuation returns slump, and young families in Western Australia were also coming under financial pressure.

"We are seeing very significant issues in WA because house prices have slipped quite a bit there," said Mr North.

"People had to really extend themselves to get into the market, so we are seeing quite significant signs of negative equity emerging in WA."

--------------------

Hardly a glowing appraisal of the RE industry outlook over the coming months (years?).



aj

 

[gfresh]

Here is the goldcoast specific slant of that article, which I tend to agree could be true. Lots of small businesses running behind with large mortgages, feeding off other people with large mortgages in the same situation.

http://www.goldcoast.com.au/article/2008/10/24/17907_gold-coast-top-story.html

"The Gold Coast is at the bleeding edge of what's happening," said Mr North.

"The Gold Coast is certainly facing it more than other areas of Queensland and other states, although Western Australian is slightly worse, especially around Perth

"The Gold Coast will move closer to slowing economic growth and recession than other areas."

...
He said young Gold Coast families on middle incomes who purchased when house prices peaked were now struggling to keep up with repayments.

Many would be forced to sell at a loss, he said.

By next March, 4282 such families on the Coast will be suffering mortgage stress and 1156 of them will be in 'severe' stress, the figures show.

Also likely to be hurt are those classed as 'suburban mainstream', with an expected increase of about 2 per cent to 5779 households and 2394 under severe stress.

Should be able to buy a 2br unit close to some of the best beaches in Australia for under $350k. The sort of scenery that in Sydney or in Melbourne would cost you close to twice that. In fact you already can, but you'll probably be able to buy a bit better.