House prices to keep falling for years

[robots]

I repeat the basics again:

FHOB, entry level $330k unit (Brisbane):

Minus $14k - $30k deposit = $286k loan
$466/wk (7%)+$26 rates+$30 bodycorp = $522/wk

Rental Equiv: $300/wk.

Savings of $222 over mortgage put into bank x 52 weeks = $11,544

Deposit of $30k x lowly 5% interest x 0.70 (mid-bracket) = $1,050 interest

Total at end of year 2009 renter: $12,594

FHOB: 3% x $330k = $9.9k cap gain. Even a small possibility of a 2-3% fall, puts you a few behind, and likely $20k behind the lowly renter. It is quite a risk, never mind a bad case of 10% fall in 2009 were to take place.

To be honest, I doubt most FHOB do these sort of sums purely on dollars, although maybe some are starting to.

I think this, more than ever has stalled price rises this year -- there is no rush. There is no "I better buy now or it will cost me 10% more next year", or "I will never be able to afford my own place". This was the fear last year, this is what kept people buying.

Until that returns, the status quo will remain - low ballers, window shopping, but little buying. Then maybe the herd will take over, and when they see others buy in great numbers, they will buy.

As we saw after the recession in 1991, it was a good few years until that took place again.

hello,

great work Gfresh, its a very interesting situation and relies on the savings being made,

after Yr1 for renter things also slowly change as rent increases, sure not a heap but it does creep,

in both techniques, buying or renting the discipline is crucial and those on the rent should be killing it at the moment with rents so low,

over a 20-30yr period both are on the stash and thats what i look for because its really only around the corner

thankyou
robots

 

[sinner]

http://www.abc.net.au/news/stories/2008/11/08/2414228.htm

New home buyers in New South Wales are set to get a $3,000 boost in next week's mini-budget.

The State Government will increase the first home owners grant for people buying newly constructed properties in next Tuesday's mini-budget.

It means people will now be eligible for a total of $10,000 from the State Government plus $14,000 from the Commonwealth.

People buying new properties worth up to $500,000 will also be eligible for stamp-duty concessions, meaning they will get up to $42,000 worth of assistance.

More text not quoted

I find it amusing that the one thing that people are saying is saving our house prices from the fate shared by other countries is a lack of supply when compared to demand...which might be true, fair enough.

Except now the Government prop of $24,000 for the next 150,000 new first home owners simply = a $3.6bn bailout to the property developers. You gotta be kidding me. They say the only thing that saving us is lack of supply so you wanna prop up the supply?!

 

[arco]

Cant see much of a shortage

The number of new listings advertised across the market nationally during the last week has again increased, cementing the fact that vendor confidence has well and truly improved following six consecutive weeks of new listings increases. Over the last week, 15,610 new properties were advertised for sale which sees new listings now sit well above the 12 month average.




RPdata

 

[robots]

http://www.abc.net.au/news/stories/2008/11/08/2414228.htm


More text not quoted

I find it amusing that the one thing that people are saying is saving our house prices from the fate shared by other countries is a lack of supply when compared to demand...which might be true, fair enough.

Except now the Government prop of $24,000 for the next 150,000 new first home owners simply = a $3.6bn bailout to the property developers. You gotta be kidding me. They say the only thing that saving us is lack of supply so you wanna prop up the supply?!

hello,

gotta spread the love sinner, cant just have the car industry, farmers and other manufacturers always getting the handout

thankyou
robots

 

[sinner]

Actually robots, in my opinion, those are the only people that should be getting handouts.

Keeping manufacturing and commodities skills (i.e. productivity) in the country is essential to stop us from ending up in the same situation as the US (although we are obviously well on our way) where now almost everyone is a consumer and the whole economy revolves around the consumer.

Obviously it's not so clear cut but you can't deny the trend.

There is already the Howard govs perpetual home owners grant (aka bailout) of $10k, Rudds finite package is just a cash injection into a market that needs to fall.

 

[nunthewiser]

Actually robots, in my opinion, those are the only people that should be getting handouts.

Keeping manufacturing and commodities skills (i.e. productivity) in the country is essential to stop us from ending up in the same situation as the US (although we are obviously well on our way) where now almost everyone is a consumer and the whole economy revolves around the consumer.

Obviously it's not so clear cut but you can't deny the trend.

There is already the Howard govs perpetual home owners grant (aka bailout) of $10k, Rudds finite package is just a cash injection into a market that needs to fall.

The building industry and all the industrys that supply the products to them is absolutely huge

 

[robots]

hello,

no worries sinner

thankyou
robots

 

[sinner]

The building industry and all the industrys that supply the products to them is absolutely huge

I really don't want to appear like I'm harping on, just wanted to link an article really.

But despite the truth in what you say, you also have to consider that we can't exactly export a glut of houses to developing nations like we can with extra grain or other commods.

Even if we all believe in robots view that there is still a housing boom (or at least not a bust) going on then why oh why would you want to push the last of our industries which is in said good shape into oversupply territory?

 

[kotim]

Robots, rent does not always go up, have a look at past recessions etc and you will see decreases in rent or sideways for a long time.

 

[Judd]

I really don't want to appear like I'm harping on, just wanted to link an article really.

But despite the truth in what you say, you also have to consider that we can't exactly export a glut of houses to developing nations like we can with extra grain or other commods.

Even if we all believe in robots view that there is still a housing boom (or at least not a bust) going on then why oh why would you want to push the last of our industries which is in said good shape into oversupply territory?

Not too sure where robots gets his/her data from but this is some infor from RP data which uses, I understand, Vic Gov sales data.
Median Sales Price

St Kilda

Rpdata
median price

Sep-08 $328,750
Aug-08 $360,000
Jul-08 $396,000
Jun-08 $350,000
May-08 $354,000
Apr-08 $405,500
Mar-08 $423,000
Feb-08 $365,000
Jan-08 $463,000
Dec-07 $420,000
Nov-07 $380,000
Oct-07 $380,750


So where is the 14%+ increase in St Kilda which robots espouses? Evidence and clarification please

 

[robots]

hello,

http://data1.reiv.com.au/trendchart/default.aspx

found info from rp data,

thankyou
robots

 

[gfresh]

I thought you owned an IP Unit? Source: http://www.realestateview.com.au/po...1&suburbname=st kilda&state=vic#median-prices

However, a quarter-by-quarter perspective isn't that reliable I will agree.. next year will see how the numbers are panning out properly.

 

[robots]

hello,

look out great results here:

http://www.reiv.com.au/news/Economic-uncertainty-causes-house-price-volatility-

a mixed bag, look at those units pepperoni hanging in there strong man,

14.7% for st kilda I hope some of that rubbed off on the unit market

enjoy the day, spend up

thankyou
robots

hello,

please see post 1491,

is that a 40% drop?

thankyou
robots

 

[ROE]

I like history, let see how it pan out in 2002 in the US. they love housing back then, a virtual to riches

this is written by a nobel price winner on economic PAUL KRUGMAN

http://www.nytimes.com/2002/08/16/opinion/16KRUG.html?ex=1226466000&en=d96db334cae99ceb&ei=5070

the year is now 2008 .... how good is this guy... when smart people speak you listen and those ignore do so at their own peril

 

[gfresh]

Yawn:

BRISBANE house prices suffered the biggest fall in the country in the three months to September, dropping 5.2 per cent, according to Australian Property Monitors.

Its latest data shows the median house price for Brisbane at $415,963 down from $438,805 in the June quarter.

http://www.news.com.au/couriermail/story/0,23739,24632190-952,00.html

 

[finnsk]

An article from Bloomberg
http://www.bloomberg.com/apps/news?pid=20601087&sid=asd0.p2Zg9EA&refer=home
Dont think this is positive

drop in shipments is also bad news for Australia's indebted consumers. The mining boom fueled a 30 percent surge in household incomes in the past five years, more than any other developed economy, according to the central bank.

Many households used the cash to take on debt, which almost doubled since 1999 to around 160 percent of incomes, a higher ratio than the U.S. and U.K., according to Shane Oliver, senior economist at AMP Capital Investors in Sydney. The median national house price soared about 140 percent in the same period.

``Australian households are very vulnerable, which partly explains why the central bank has been so aggressive'' lowering rates, Oliver said.

 

[Glen48]

George Soros is predicting a drop of house prices by 90% in USa ( same here) he did not realise how bad this could get and has admitted it is much bigger than he ever thought it could get to.

 

[cuttlefish]

Glen have you got a link to an article - it would be an interesting read.

 

[MrBurns]

Glen have you got a link to an article - it would be an interesting read.

Got to admit the news all round is getting worse almost by the day, hate to think whats ahead.

 

[Glen48]

Try this:
GeorgeSoros.com.
GM share are worth $0 are here we are trying to support the cars industry.
This is moving so quickly it is like some one has a sore throat, gets worse, goes to bed, goes to Hospital at 3AM and is dead the next night