House prices to keep falling for years

[kotim]

There is no shortage of rental supply generally, IN our booming environment there has been quite a floating population moving around for the jobs that they can get relatively easy. So when for eg a mine opens up people move there and voila there is a shortage. Sure there are super good areas where everybody wants to live if they could and those areas will suffer less.

In the biggest property boom for a long time, people were buying investment properties left right and centre and only a few of them (relatively speaking) were for immigrants. The rest are for the normal numbers of kids growing up and moving out in the world.

There were not too many people buying two and three houses for themselves to live in all at once.

Absolute common sense tells us that drastic rental undersupply across many sections of the community was and is absolute crap.

However good luck to all those who make profits.

 

[numbercruncher]

Could I please point you to this latest paper just released by someone?

http://www.geocities.com/homes4aussies/h4a081104.pdf

It's an excellent read and have a look at the appendices too.

On the issue of being "informed", this is largely based on HOW you were informed and by whom. Do I prefer to get informed by vested interest parties or do I prefer to be informed by independent analysts using official ABS data?

Again, I already mentioned property discussion can be extremely sensitive because a lot of us have "EMOTIONALLY" invested in our own "beliefs" and that it is extremely difficult to believe anything else. Surely you can see it in your own trading style and others too?

Pretty good reading that people with the finger on the pulse should already be aware quite of .....

In the aforementioned paper I showed that renting is a far more economically sensible decision for
all Australians who do not currently own their home. Currently the median priced house in most
Australian capitals is $400,000 or more, and the median rent is around $350 per week. At a
mortgage rate of 9%, and with very conservative estimates on the cost of ownership, you would
need to have a deposit of $264,833 to buy that house and enjoy the same standard of living as you
do renting it. At a mortgage rate of 7%, the figure is still a whopping $235,560.
And if the world went crazy and interest rates dropped by almost 4% overnight - down to 5% -
somebody buying a roughly median priced home would still need a massive deposit of almost
$200,000 to enjoy the same standard of living as they do renting that home!

 

[Warren Buffet II]

Name them I'm a South Aussi dont know your area.
Know Brentwood.---34.3% growth last year!----16.4% growth each year for last 10 yrs.



Surfers Growth 12 mths---2.1% Annual over 10 yrs/yr ---15.6
Southport 10.1----13.4
Upper Coomera 13.5----10.1
labrador -5.6---10.8

Labrador looks the worst Surfers could be next.Plenty of supply so you wouldnt be buying there.

Huonville.---2.2% and Annual over 10 yrs 10.1%
Id say there was plenty of supply here.

Fitzroy north 20.5% and 11.9%

And Real Estate prices have been falling for YEARS evidently!
Only see one out of this lot! Labrador.

As people say when those numbers are quoted and show a fall, those are averages and do not reflect the real thing.

So basically, prices are going down big time period.

WBII

 

[lioness]

hello,

another 2mths singlefished? mr burns says 6mths, glen48 says 12mths,

we will just add that to the 3yrs and 2mths from the previous number 1 thread "house prices to stagnate for years", the king of all Property threads here at ASF

which was actually closed because it's just so embarrassing for the poverty pack,

investors will not return to the property market en masse like previous, construction is down and the ride is going to be fantastic

thankyou
robots

Sorry to be a smartie robots, but Fitzroy North has had more growth than St kilda, but I won't argue with Mr Burns. He tells me I will lose money staying where I am.

Hehehe

 

[CamKawa]

Name them I'm a South Aussi dont know your area.
Know Brentwood.---34.3% growth last year!----16.4% growth each year for last 10 yrs.



Surfers Growth 12 mths---2.1% Annual over 10 yrs/yr ---15.6
Southport 10.1----13.4
Upper Coomera 13.5----10.1
labrador -5.6---10.8

Labrador looks the worst Surfers could be next.Plenty of supply so you wouldnt be buying there.

Huonville.---2.2% and Annual over 10 yrs 10.1%
Id say there was plenty of supply here.

Fitzroy north 20.5% and 11.9%

And Real Estate prices have been falling for YEARS evidently!
Only see one out of this lot! Labrador.

I think page 3 from http://www.geocities.com/homes4aussies/h4a081104.pdf sums up the dodgy real estate data that you spout here tech/a.

When Statistics are Used to Confuse​

Have you noticed that, unlike 12 months ago, stories of house price increases are not splashed everywhere? Well, that’s the first point to make. The data is not conducive to promoting residential housing as an investment, so the media are relying on other tactics – stories of huge
rental increases, fears of the increase to the FHOG causing a surge in house prices – to get home buyers and naïve investors interested in housing again. You may have noticed that you actually have to read well into articles, often well into the newspaper, to get some actual figures on house prices. And when you do, they probably show house prices increased – right?​

How are they doing that when the data clearly show that house prices are falling? Well they have stopped quoting short term data and are reporting primarily – often only – the annual data. And the annual data will be the last to show the price falls because it “smooths” out “lumpy” data and
disguises turning points in the markets.​

So, vested interests – the media included – will use short term data (even auction clearance rates) to emphasise a take off in the market, and will use long term data when the market has turned down. These comparisons involve comparing prices from one point in time to another (perhaps a year
earlier), but they do not necessarily give the full picture of what has happened between those points. ​

 

[tech/a]

It is possible to present arguements for whatever side of "A" fence in any commodity you wish to present.

If people believe there is no opportunity in that commodity and in this case housing,they wont look for it,in fact if it stands in front of them they wont see it,they will agrue it out of existance.

Others will see opportunity and do something positive with it.

If renting is your thing,then go and rent.

If being entrepenurial in Housing,Stock,Business,Art,Coins,Futures---whatever--then you'll find those opportunities.

Those who dont adopt crowd mentality often stand out from the crowd and are pretty well always told they are fools,in fact some people even get abusive!.Adopting crowd mentality is percieved as safer. If being safer is your thing then run with the crowd.

There are 3 keys.
(1) Recognise opportunity.
(2) Evaluate it.
(3) DO IT.

Some get to 1---few go beyond.
Bogged down by fear and endless discussion.

Its pretty simple really.
If the Numbers add up then do it.
If they dont then step aside.

We are not all doomed,only those who wish to believe they are!

 

[numbercruncher]

Exactly camkawa .....

Fortunately the average mug on the street is no longer falling for this manipulation of the data which is made evident by skyrocketing inventory and nosediving clearance rates and prices.

And its all gaining momentum !

 

[wavepicker]

Stumbled accross this site a few days ago. Some interesting charts and statistics there:-

http://www.housingbubble.com.au/

 

[Temjin]

It is possible to present arguements for whatever side of "A" fence in any commodity you wish to present.

If people believe there is no opportunity in that commodity and in this case housing,they wont look for it,in fact if it stands in front of them they wont see it,they will agrue it out of existance.

Others will see opportunity and do something positive with it.

If renting is your thing,then go and rent.

If being entrepenurial in Housing,Stock,Business,Art,Coins,Futures---whatever--then you'll find those opportunities.

Those who dont adopt crowd mentality often stand out from the crowd and are pretty well always told they are fools,in fact some people even get abusive!.Adopting crowd mentality is percieved as safer. If being safer is your thing then run with the crowd.

There are 3 keys.
(1) Recognise opportunity.
(2) Evaluate it.
(3) DO IT.

Some get to 1---few go beyond.
Bogged down by fear and endless discussion.

Its pretty simple really.
If the Numbers add up then do it.
If they dont then step aside.

We are not all doomed,only those who wish to believe they are!

Just wondering Tech/A, are you implying that those who are "bearish" in property are merely following the "crowd mentality" and are not recognising the "opportunity" that you see in your own eyes? This is the impression you are giving me so far, so am curious on your opinion.

How would you determine crowd mentality? In here, I would agree that the majority of the crowd are against properties for reasons I wouldn't go further here. And it is true that the minority (contrarians from the perspective of ASF's population) are bulls and thus, not part of the "crowd".

However, at least outside this internet forum and into the real world, I still see a crowd mentality in most people still believe property prices have not fallen yet and will ALWAYS rise regardless of what happens to the local/world economy. This is, of course, based on my limited informal survey and observation of my personal networks so far.

So I would consider myself to be not part of this "herd" because I am against almost everyone I know who are still bullish on properties. They feel it is safer to be in properties because everybody are doing so and are either buying or looking into it. In fact, I am told being a "fool" for not getting into properties right now because of the same arguments used in the appendices as attached in my previous reports. So I guess this is our differences on how we perceive the mentality of the crowd so far.

Regardless, I do understand what you are trying to say. You are seeing opportunities in the property market, and based on your experiences, you will be exploiting it. I don't and I see far better opportunities elsewhere.

And yes, it is definitely possible to present arguments for which ever side you are with. It goes the same for almost any situations that has not yet been observed or happened yet. (i.e. religion! )

 

[tech/a]

Just wondering Tech/A, are you implying that those who are "bearish" in property are merely following the "crowd mentality" and are not recognising the "opportunity" that you see in your own eyes? This is the impression you are giving me so far, so am curious on your opinion.

Those who are in a position to take advantage of opportunity---Yes.
Those who are 20 with Hex debts and nothing more than an opinion--No.

How would you determine crowd mentality? In here, I would agree that the majority of the crowd are against properties for reasons I wouldn't go further here. And it is true that the minority (contrarians from the perspective of ASF's population) are bulls and thus, not part of the "crowd".

Those who in capable of determining how anything other than the "crowd" exists.

However, at least outside this internet forum and into the real world, I still see a crowd mentality in most people still believe property prices have not fallen yet and will ALWAYS rise regardless of what happens to the local/world economy. This is, of course, based on my limited informal survey and observation of my personal networks so far.

All commodities Rise and Fall. But not all at the same speed and not all with the same conseqences to investors. Ive not seen more than a halting of price advancment in my area of property investment (Southern beaches).
If it falls 30% will I care. Not really After a 300% rise in the time of owning them a 30% retracement from their highs isnt going to bother me.(Ive sold enough property to be geared 38%)

So I would consider myself to be not part of this "herd" because I am against almost everyone I know who are still bullish on properties. They feel it is safer to be in properties because everybody are doing so and are either buying or looking into it. In fact, I am told being a "fool" for not getting into properties right now because of the same arguments used in the appendices as attached in my previous reports. So I guess this is our differences on how we perceive the mentality of the crowd so far.

The herd you speak of is a minority group.I'm part of it and I agree with them to the extent that there is opportunity mounting,there is enough evidence to support my research into the opportunity and the Numbers for my next developement are adding up. Mind you most of the "Crowd" --yours--wouldnt be in the position to take advantage of the oppotunity I and others in my group do see---after all it is either all or part of our business.

Regardless, I do understand what you are trying to say. You are seeing opportunities in the property market, and based on your experiences, you will be exploiting it. I don't and I see far better opportunities elsewhere.

Thats fine T,I also see opportunity in most areas trouble is time and resourses,but what a wonderfully challenging time we live in!!!

And yes, it is definitely possible to present arguments for which ever side you are with. It goes the same for almost any situations that has not yet been observed or happened yet. (i.e. religion! )

True.
Its an individual thing.
You will see,believe and live by your perceptions.
Unfortunately the majority cannot think for themselves---hence crowds.
Its good to be able at times to step out of our "crowd" and see what others are doing.

 

[tech/a]

Exactly camkawa .....

Fortunately the average mug on the street is no longer falling for this manipulation of the data which is made evident by skyrocketing inventory and nosediving clearance rates and prices.

And its all gaining momentum !

Again hearsay.

Can you show me data refering to Skyrocketing inventory and nose diving clearence rates (not auctions--most know settlements occur in these times in after auction negotiations).
Ive not seen anything (A few pockets) but certainly not across the board.
I thought I had just about every stat available.

This is a case of "crowd mentality"
Head nodding --back slapping---no hard evidence other than----You can see it EVERWHERE---you'd have to be blind!!

Everywhere???---

 

[numbercruncher]

Sorry tech but I cant help you ....


You see the market how you interpret it from behind your rose coloured glasses and thats cool !!

I hope you continue to get super rich from your top secret information that supercedes that of which the herd has access to ....

I guess the price falls of virtually every Australian city this last quarter is herd propaganda as well ? and if so, why is this " false " information fed to the market ? whom does it benefit ?


The coming months will shows who is more right, property doesnt tank across every market overnight - its a drawn out affair. hindsight will be our judge !

cheers.

 

[Mofra]

NB - for the record ~ I AM bullish on property in the long term, but bearish on property in the short term ~ need to give it another 2 quaters before I will reassess the situation

On a side note, David Potts (he's an economist/journo so take this with a grain of salt) has pegged March 09 as the economic low point in the current crisis/cycle. As you'd be re-assessing shortly after this, will be interesting to see if you agree with him as circumstances unfold.

 

[gfresh]

That paper referred to is quite interesting. It's a little rough, but many of the points in there are quite valid. Interestingly it dismisses the very RBA argument talked about. I don't trust the RBA to be fully on the pulse of things either, having to slash interest rates the fastest ever from record highs only 6 months ago.

Doesn't show too much foresight in predicting a slow-down, if anything, the extent of the cuts seem to be indicating an intense fear of things getting much worse.

As stated in there, the belief that house prices peaked in 2003 is silly. It is possible in Sydney this is the case, but in every other state, which has seen 5-10-15%+ growth for the last 5 years, whereas inflation is tracking at 3-4%.

You want supply shown? well if you'd like I can drive around the Gold Coast to many of the likely problem areas and take photos of an overwhelming number of sale signs, and rows and rows of newish cookie cutter homes that all are priced at $400k+. Street after street of them. Living on the ground here (and dealing with local small businesses here - suffering) shows quite a different perspective.

I can also point out the demographics if you'd like, maybe take some photos of the empty beer bottles strewn across the back-streets, take some pictures of the 'high class' citizens living in some of these areas, maybe capture somebody doing in a skid in a VN commodore if you'd like - they're not hard to find

To be honest, I don't know how far prices will fall, but the conditions are definitely there short term for things to fall markedly.

Here is a quick example, Broadbeach, just across the road. Now this is not a large area, I could probably take a photo capturing one end to the other, it's probably a few km across. But look at the number of properties for sale in this small area:

http://www.realestate.com.au/cgi-bi...000&px=350000&pme=25000&pxe=350000&cat=&o=def (133 under $350k)

http://www.realestate.com.au/cgi-bi...00&px=500000&pme=350000&pxe=500000&cat=&o=def (178 - $350-500k)

http://www.realestate.com.au/cgi-bi...00&px=800000&pme=500000&pxe=800000&cat=&o=def (174 - $500-$800k)

http://www.realestate.com.au/cgi-bi...&px=1250000&pme=800000&pxe=1250000&cat=&o=def (141 - $800-$1.25M)

http://www.realestate.com.au/cgi-bi...CH&pm=1250000&px=&pme=1250000&pxe=&cat=&o=def (104 - $1.25M+)

So all in all 730 properties in a small stretch. Yes, it's a lovely beach.

Now having watched this market for a few years, I can tell you these sort of numbers are not normal, and I find it extremely difficult to believe all this supply is going to disappear that quickly. If not, at least without large price falls, especially in the upper end. Why would anybody accept the asking price on any one of those individual properties when they have so many similar available at every price point to bargain against?

 

[sinner]

tech/a for those of us who "are 20 with hex and just an opinion" could you please explain how auction clearance rates are no longer a valid metric for you now that they are at say 60% for Sydney where they used to be 80%?

I am not trying to be contrary or condescending, I really would like to understand...

Having done some of my own research I found this nice article "What auction clearance rates don't tell you"

http://www.smartcompany.com.au/Free...t-auction-clearance-rates-dont-tell-you-.html

From Sep 2007, found this particularly interesting

An excerpt

Across an entire year – unless there has been some major impact on the property market – we would expect to see a clearance rate of 60–70% and this range indicates a balanced market. Clearance rates consistently above 80% indicate a very high level of buyer demand and a reduced supply. For instance, across Melbourne’s inner-urban areas, clearance rates so far this year have ranged between 81.8% and 91.6%. For the same period last year, the range was from 68.3% to 85.1%. Less buoyant geographical areas, where the demand/supply ratio is more balanced, return much lower clearance rates.

Once the busier spring market begins – generally from the first week of October to the second week of December and more stock comes on to the market, clearance rates anywhere between 60% and 80% would be considered normal. But, the temptation is to interpret any drop in clearance rates as indicative of falling prices and a slowing market. Not so!

It is only when the rate falls consistently below 60% that it might herald a market change, and usually it is not because values are plummeting! This could indicate a lower volume of buyers, that vendor expectations are too high to effect large numbers of sales through the normal auction process, or that vendors are being pressured to sell. A significantly oversupplied market, well in excess of even strong demand, can also dilute the clearance rate outcome.

If the rate remains consistently above 70% at the start of spring and remains at that level mid-way through December, it is often a sign of buyer strength that is likely to remain consistent in the market once it gears up again in February. We could then expect to see a strong level of opening activity off the back of continuing pent-up buyer demand. If clearance rates remain consistently above 80% during spring, then that could be regarded as an extraordinary level of demand, especially if the market is well supplied.

Finally, given the voluntary nature of sales reporting in the industry, the data must necessarily be viewed as incomplete. At best, the figures should be viewed as informative rather than directive. Further, there is nothing to stop an agency only reporting in on weekends where their clearance rates make hay for the business! For instance, they may well report in when they sell 80–100%, but decide not to bother on weekends when they only do 50–60%.

Until we have mandatory reporting of all sales in a regular and timely fashion, investors should view this data as nothing more than what is a very broad indicator of trends.

So according to the above, if we take the Sydney clearance rates of 60% as valid (even assuming RE agents reporting their best data), we are at "balance" right now, possibly slipping into "market change" either oversupply, lower buyer volume, high vendor expectations, vendor selling pressure, or a combination of the lot!

If tech/a agrees with the above link analysis that a consistent 70+% rate heading into Jan is needed to sustain buyer confidence and buying in general...

Here are the auction clearance rates for Australian capital cities, for the weekend ending Nov 09, 2008.


Again, not trying to put forth a particular viewpoint, just wanting others input so I can learn

 

[gfresh]

If I also read one more "first home buyers look here" in the listings I'm going to scream.. It's ridiculous if they think this will really help the market.

In fact I was just thinking how much of a joke this really is to believe this is going going to fix the market in the short term. Announced last month I think it was, and expiring June 09, lets see a typical scenario:

Miss X and Mr Y (November 08): "Awesome, the government is offering us $14/21k to buy a home, we've got $5k in the bank, lets go. "

(Off to the bank, $400k property in their eyes in Upper Coomera.. $300k is minimum here for a small unit, use that example if you like but it doesn't come off much better)

Mr Loans Officer: "Well yes, you can get the grant great... BUT we're tightening lending standards significantly, and we're not really writing anything under 90% LVR. 6 months ago sure. We're more sensible these days, and our risk department, and our Insurers have told us we have look at all these others things in closer detail.

Basically, we're not just going to offer you a loan just because the Government has given you 14/21k which you thought you could use as a deposit - we need to make sure you can actually pay it back and can save over time. So you need a 6 month savings history, close to (10%) $40k deposit. "

(in Loans Officers mind: Then we'll use that 14/21k to reduce the total loan amount in case your property value falls 10%, and you lose your job and have to sell in a distressed sale to an over-supplied market)

Mr Y (Late November 08): "shoot, damn, looks like we need to save $40k before we can go ahead and do this. Lets get together and really save for the next 6 months so we can afford it"

(Mr Y and Miss X work out on their quite good combined $100k salary, or approx $1500 clear, they can save: $700/wk, as they are VERY disciplined savers, and have very little toys (yeah, sure))

Miss X: "But er, honey, 26 x 700 only equals $18,200, and doesn't the extra super dooper grant end in June?"

Some common sense needs to be thought of here when it comes to these magic FHOB saviors, even the Government must know it still doesn't really add up as easily as planned to make any short-term difference.

Very much doubt the Government will be stopping the extra grant in June 09 as a result, but we will see.

 

[sinner]

I thought the extra grant expired "June 09 or the next 150,000 buyers"

 

[nunthewiser]

If I also read one more "first home buyers look here" in the listings I'm going to scream.. It's ridiculous if they think this will really help the market.

In fact I was just thinking how much of a joke this really is to believe this is going going to fix the market in the short term. Announced last month I think it was, and expiring June 09, lets see a typical scenario:

Miss X and Mr Y (November 08): "Awesome, the government is offering us $14/21k to buy a home, lets go. "

(Off to the bank, $400k property in their eyes in Upper Coomera.. $300k is minimum here for a small unit, use that example if you like but it doesn't come off much better)

Mr Loans Officer: "Well yes, you can get the grant great... BUT we're tightening lending standards significantly, and we're not really writing anything under 90% LVR. 6 months ago sure. We're more sensible these days, and our risk department, and our Insurers have told us we have look at all these others things in closer detail.

Basically, we're not just going to offer you a loan just because the Government has given you 14/21k which you thought you could use as a deposit - we need to make sure you can actually pay it back and can save over time. So you need a 6 month savings history, close to (10%) $40k deposit, and we'll use that 14/21k to reduce the total loan amount".

Mr Y (Late November 08): "shoot, damn, looks like we need to save $40k before we can go ahead and do this. Lets get together and really save for the next 6 months so we can afford it"

(Mr Y and Miss X work out on their quite good combined $100k salary, or approx $1500 clear, they can save: $700/wk, as they are VERY disciplined savers, and have very little toys (yeah, sure))

Miss X: "But er, honey, 26 x 700 only equals $18,200, and doesn't the extra super dooper grant end in June?"

Some common sense needs to be thought of here when it comes to these magic FHOB saviors, even the Government must know it still doesn't really add up as easily as planned to make any short-term difference.

Very much doubt the Government will be stopping the extra grant in June 09 as a result, but we will see.

ok fair enough BUT what happens if MRand MRS X already have been saving towards there first home and view this dip in prices(in various locations) combined with the govvy carrot gift of the FHOB,combined with falling intrest rates an excellent time to buy ?

 

[numbercruncher]

Spot on gfresh - shows how desperate they are throwing all there hopes on the FHB to save their sorry sorry situation ....

I read recently that only 5pc of gen Y have entered into home ownership ...... and I really really dont see this changing because of a extra 7k - I infact see it getting worse because of tighter lending standards !!

 

[nunthewiser]

Anyone here know where or has a rough chart/statistics/info on the japanese property market ?

be mighty grateful

thankyou in advance