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House prices to keep falling for years

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Me and my Fiance are considering buying....although everyone advises against it. Perhaps I can get some advice in my situation?

Now that kinda surprised me. Didn't expect the sentiment to change so quickly. Who are the people that you called "everyone"? Friends of similar age or baby boomers who have been in the business for many many years? (and have seen the cycles)

I consider this to be a long term investment, and the long term trend of an economy is up....so should I really wait on it?

Yes, the REALLY LONG TERM trend of economy is up because well....human society tend to grow. But are you willing to buy at the top of the market?

Any advice greatly appreciated.

My advice to you is that be very aware of your recency bias and REAL about the history of economic first. Consider the advises that those "everyone" have been giving you. Try to look at it from an unbiased way. If you find a point that you do not agree, ask yourself why you believe so? Also try to consider where did you get your information from? From the media? From the real estate agents who claim house prices never fall? Or from "similar age" friends who has done this 2-3 years ago and is now better off? (in which you would automatically assume that history will repeat itself forever)

My observation has been that alot of young people, especially those who are very well educated, are very prone to being too confident of themselves and ignore information and history that they have not personally experienced before.

To give you my perspective, and a surprise as well, I am ALSO a Master educated 26 years old with a combined income over $100k with my girlfriend (not yet my Fiancée yet hahah). We decided to put off buying house until the whole global credit crisis mess has sort out itself and when the economy has go through it's recession (and hopefully not), a depression.

Regardless, if you don't really care about the investment aspect of owning your house and that your decision to purchase it is an emotion one where you would like your own home and avoid renting, and that you are VERY CONFIDENT of your ability (and your Fiancée) that you will not be out of jobs over the next several years, then go ahead and purchase it. However, do not expect your house prices do go up as much as what has been observed over the last 7-10 years. This once in a life time global credit boom will not happen for a LONG LONG time again.
 


Is this true? I see alot of properties advertised this way, and the vendor does not accept offers of the advertised price.
 
http://www.bloomberg.com/apps/news?pid=20601206&sid=aBCuyixr8nJE&refer=realestate


Once in a hundred year event, a typical black swan. No wonder a lot of people ALWAYS BELIEVE that house prices will NEVER FALL.

Of course, I said to be wary of information from the media, and this is no exception. However, I would not look at the comments made by the journalists, rather, I would look at the data presented and find out if what was said is true.
 

My take on this is, you going to need a place to live, whether buying and renting you still need a place.

If you can afford it after you factor in all the down sides then why not.
if you are having kids having your own place is better than renting because you get to do what you want with your place and have a stable home for the kids... with renting you up to the mercy of the landlord and they can sell up the place any time and force you to move when you don't want to.

you obviously got your finance right and buy within your price range..

260K is reasonable and provided you can continue to repay the loan through thick and thin economic condition then I cant see the reason for holding it back.

I bought mine when I was a little younger than you but back then I wasnt too concern how expensive or how cheap the property was... I was purely concern on if I can buy within my price range and If I can afford to pay it if interest was to go to 12% and I repay my repayment based on 18% ..
I remember 25 years for me was $700 a fortnight ... I pay $1400 a fortnight

done deal 7 years later my own place ... about to upgrade in the next few years and calculate at 20% interest repayment

I do think current house price is over value and I'm prepare to wait a little to see how things pan out.. I have plenty of cash and I can pound anytime I want so no need for me to rush.
 
Roger Bootle is another finance journo worth reading. Good article here with applications to the Oz market IMO.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/04/ccom104.xml


 
What are "auctions with no result"? Are these auctions that passed in but the REA has failed to report them to REIV?
Cam,

I e-mailed REIV on the weekend, as I couldn't think of any normal circumstance an auction would have "no result" that wasn't either a sale, passed in, or later sold after negotiation with the highest bidder. My reply (just received) was:

"Thank you for your email.

Auctions with no results are not included in any of the above figures.

Kind Regards,"

So basically we have:

TOTAL AUCTIONS
This week: 428
Last weekend: 445
This time last year: 491

S Sold at Auction: 211
SB Sold before Auction: 56
SA Sold after Auction: 4

Passed in: 157
Clearance rate: 63%

Postponed: 0
Withdrawn: 2
Auctions with no result: 54

54 "results" not included in the above figures. Have asked for further clarification, because to be honest I'm baffled.
 
Another update from over here:

http://business.timesonline.co.uk/t.../construction_and_property/article4477236.ece

 
Far out.. Just noticed this thread! Completes the trinity I guess..

House prices to..... nah can't think of another one.

Those comments by John Edwards are pretty worrying, he's a guy that should be on top of the data. Interesting times anyhow.

I'm curious about the RBA, Glenn Stevens strikes me as a smart cookie, and they kept rates on hold even though they have been tracking all of the falling data points.. Are they still inflation nazi's or are they thinking it's not as bad as to need some pretty swift rate cutting?

Will go and have a closer read of Edwards writing now, haven't noticed it before, thanks for the link
 

They want to make sure they have pushed the economy well and truly into the Bust cycle before they take the peddle off and start lower rates. I believe they will keep rates on hold until you start seeing the liquidation process begin and significant falls in house prices, l can't see them lowering rates and letting house prices barrel on upward if they do we are on a road to nowhere.
 
This thing of rates, jawboning by Government and the banks. Interest rates are effected by world monetary policies and the most import, MONEY SUPPLY.

Governments have only the ability to deflate its value by printing more. On the global plain money is in short supply so it is getting expensive. That means higher rates, which we have witnessed with the actions of our big four over the last few months. The US are printing like crazy to try and keep rates down but still it is failing and the banking institutions continue to go to the wall.

It has got to the stage here in Aus. where small businesses can no longer get money at all for plant and expansion.

So in my view if anyone really believes that there is any chance of a real drop in local rates they need to have a good think.
 
So in my view if anyone really believes that there is any chance of a real drop in local rates they need to have a good think.
I just walked past my local ANZ branch, they have lowered the 6 month term deposit rate from 8.15% to 7.80% . The banks are pretty good at picking which way rates are going to move, they wouldn't be lowering rates if they thought they were going up. It would suit me if they kept going up but I don't think they are going to.

Maybe you should have a good think?
 
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