House prices to keep falling for years

cuttlefish · 26 October 2008

What are peoples views specifically on Sydney house prices, particularly in the eastern and northern suburbs and the inner city?

Unlike places like Brisbane and Perth, Sydney boomed pretty heavily up till about 2003 but then seemed to have a bit of a peak and slump and has been a bit more orderly since then. The city is still growing at a very rapid pace. Rents have risen considerably due to lack of new supply. Interest rates are falling.

Can this neutralise some of the other effects or do people still think we're in for big price falls in Sydney?

robots · 26 October 2008

cuttlefish said:
What are peoples views specifically on Sydney house prices, particularly in the eastern and northern suburbs and the inner city?

Unlike places like Brisbane and Perth, Sydney boomed pretty heavily up till about 2003 but then seemed to have a bit of a peak and slump and has been a bit more orderly since then. The city is still growing at a very rapid pace. Rents have risen considerably due to lack of new supply. Interest rates are falling.

Can this neutralise some of the other effects or do people still think we're in for big price falls in Sydney?

hello,

i know many on another forum believe Sydney is in for a good run over the next few years due mainly to the reasons you have mentioned,

i understand it has an extremely tight rental market at the moment

thankyou
robots

numbercruncher · 26 October 2008

mantronic said:
Exactly. We dont need their type. We are getting rich off capital gains.

Just noticed this comment - seems you are a regular/common forum troll type ?

Or maybe you are a mega bear attempting to give one eyed permabull extremist capitalists a bad reputation.

either way, no one appreciates the tone of your input.

bye.

sinner · 26 October 2008

Looking at the US is like looking into the future for us. So far higher demand than supply has staved off the property tumbles that have severely affected the US, Europe, Northern Africa, Asia Major, SE Asia, etc etc.

The attitude of pay or on the street is at face value, fair enough. After all, this is the same attitude the bank has with you and they probably use better eviction agents!

Let's look into the future for the US at a second

Chicago
http://www.foxnews.com/story/0,2933,434603,00.html
and then see what happens,
http://www.chicagobreakingnews.com/2008/10/cook-county-to-resume-evictions.html

Obviously all those Capital Gains investors in the US are happy to put the keys in an envelope and send them to the bank, walk out on the debt, leave the renters holding the bag. It's well documented.

Maybe the Republicans will get their wish to reduce CGT further

I think if it happens in Aus it will probably be even worse than the US. Someone already linked the article by Paul Sheehan in the SMH, where Hans Redeker (head of foreign exchange strategy at BNP Paribas, Europe's biggest investment bank) outlines quite simply how Australias foreign debt sits roughly and that in high probability some of this debt will be called soon.

Two weeks ago Redeker repeated his claim that abundant foreign money had been available to Australia and too much of it had been spent on real estate, creating a speculative bubble: "The easy money went straight into real estate ... Australia will now have to generate 4 per cent of GDP to meet payments to foreign holders of its assets. This is twice as high as the burden faced by the US."

later in the article quoting Ambrose Evans Pritchard of the London Times

"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."

but the real juice which imo is a different issue and what will make it worse for us than other countries (due to the 2 pronged nature of the above quotes and the below)

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."

So, property-bulls, what is your "household debt" in the interests of portfolio disclosure of course?

Do you disagree with these numbers?

Too much doom and gloom?

chops_a_must · 26 October 2008

Our housing wont be as bad as the US.

You need to understand non-recourse loans, and the price falls of properties in states that never legalised these as pointers for us.

i.e. they have fallen about 5-10% more than ours at this stage.

tech/a · 26 October 2008

The Property market is the worlds biggest pyramid scheme. Very soon, people will be holding negative equity. Cant wait.

Not if you own it.

I visit this thread every few months.
Its very clear those who hold property and those who dont.

If you own it its a no brainer.

Mofra · 27 October 2008

sinner said:
So, property-bulls, what is your "household debt" in the interests of portfolio disclosure of course?

Do you disagree with these numbers?

Too much doom and gloom?

Well, I'm not sure if "neither buying nor selling" makes me strongly bullish in real terms, although thanks to the trolling efforts of robots & mantronic, there's a fairly well defined battle on here; anyone holding property is automatically a "one eyed permabull extremist capitalist**", so I'll answer as best I can without a patronising "thank you" to finish.

My household debt consists of approximately 3.9 times my income, which propably puts me close to the "traditional" notion of mortgage stress if you incldue the rent I pay (only holding investment properties).

I pay my credit card off every month, so today for example 99.7% of my debt is tax deductable.

** Thanks to numbercruncher for the quote, you'd be a worthy addition to parliament with that effort; since Keating & Latham have retired, there's a gaping hole in the classic paliamentary quotes market

gfresh · 27 October 2008

etc... not sure why people are persisting with auctions? Agents managed to convince vendors to put up large numbers for auction, and the results have been poor.

http://www.news.com.au/couriermail/story/0,23739,24557041-952,00.html

AUCTION clearance rates crashed to record lows over the weekend, with first-home owner grants failing to offset buyers' financial crisis concerns.

In Brisbane, the clearance rate over the weekend was a dismal 28 per cent, 1 percentage point lower than last weekend and 21 percentage points lower than the figure recorded for last year.

That compares with the national rate of 46 per cent.

After so much financial uncertainty it could be just a case that buying by auction is not the way people want to go at the moment.

Queenslanders have always been a little more hesitant about buying at auction than other states.

The credit crunch means it is harder for everyone to get money and those who are cashed up know they are rare and want to drive a hard bargain.

In Sydney, the auction clearance rate plummeted to 39.6 per cent, 10 points lower than the figure recorded last weekend and 24 per cent lower than the figure recorded for the same weekend last year, The Australian reports.

nunthewiser · 27 October 2008

anyone got any data on tasmania? as according to local listings in the huon valley they getting snapped up with vigour still ........ intresting ....mind you it might be because the suns out and the tourists are flooding back in with dollars to spend , who knows ......... DO know however you get more bang for ya buck down these parts as in what ya can buy for the same dollar amount as the mainland

robots · 27 October 2008

hello,

my household debt is 20000x income, is that okay by you? or is 10000x income okay?

the RBA is continually putting out stats which indicate household debt is fine,

look at those girls on Insight the other week, 25k on credit card each and will probably just rollover soon to make it 30k,

auction's will be dead soon gfresh i think, will be good news for those selling

thankyou
robots

numbercruncher · 27 October 2008

the RBA is continually putting out stats which indicate household debt is fine

I especially love it when you make it up as you go along !

goodday to you Robi

BradK · 27 October 2008

Do you all think that fixed interest rates will hit 6% (for the consumer) in the next few months?

Brad

Pommiegranite · 27 October 2008

robots said:
hello,

my household debt is 20000x income, is that okay by you? or is 10000x income okay?

the RBA is continually putting out stats which indicate household debt is fine,

look at those girls on Insight the other week, 25k on credit card each and will probably just rollover soon to make it 30k,

auction's will be dead soon gfresh i think, will be good news for those selling

thankyou
robots

Half right. Its well known that auctions are only good in boom times. Good news for those buying that auctions are failing.

You're learning though, so can be forgiven.

robots · 27 October 2008

hello Number,

how's the leg man?

that household debt is even getting easier and easier to manage with Interest Rates dropping daily?

"we'll save you"

thankyou
robots

robots · 27 October 2008

Pommiegranite said:
Half right. Its well known that auctions are only good in boom times. Good news for those buying that auctions are failing.

You're learning though, so can be forgiven.

hello,

thanks pommie yes I am only a beginner

I dont think so, the stand off between buyers and sellers may move from the public arena to the "private" arena, real estate office or "mobile" phone

dummy bids galore, no legislation for that

the auction system is clean now

thankyou
robots

generalofthearmy · 27 October 2008

You're all guessing. This is pure guesswork. No-one should take this thread contents seriously.

I do know one thing though. You can live in a house but you can't live in a stock. House owners will find it easier in the short term than renters who thought they were smart by simply buying stocks.

robots · 27 October 2008

BradK said:
Do you all think that fixed interest rates will hit 6% (for the consumer) in the next few months?

Brad

hello,

many believe this may occur around early 09,

official cash rate down to about 4 or 4.25%, utopia when it happens man

thankyou
robots

Pommiegranite · 27 October 2008

generalofthearmy said:
You're all guessing. This is pure guesswork. No-one should take this thread contents seriously.

I do know one thing though. You can live in a house but you can't live in a stock. House owners will find it easier in the short term than renters who thought they were smart by simply buying stocks.

I also know one thing:

Most people who have bought houses are hundreds of thousands on dollars in debt.

Most people who buy stocks just spend a few k, and its usually not borrowed.

Sweet dreams

robots · 27 October 2008

hello,

every night pommiegranite

thankyou
robots

numbercruncher · 27 October 2008

generalofthearmy said:
You're all guessing. This is pure guesswork. No-one should take this thread contents seriously.

I do know one thing though. You can live in a house but you can't live in a stock. House owners will find it easier in the short term than renters who thought they were smart by simply buying stocks.

If you own your house sure , but if you have a typical mortgage youre paying out 3x a typical rental, how can this possibly be " easier " ?

House prices to keep falling for years

cuttlefish

robots

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numbercruncher

Beware of Dropbears

sinner

chops_a_must

Printing My Own Money

tech/a

No Ordinary Duck

Mofra

gfresh

nunthewiser

robots

hello

numbercruncher

Beware of Dropbears

BradK

Pommiegranite

robots

hello

robots

hello

generalofthearmy

robots

hello

Pommiegranite

robots

hello

numbercruncher

Beware of Dropbears

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