House prices to keep rising for years

[Beej]

Looks like the bears have been right so far ... and as has been said no area is immune.

From this story http://www.news.com.au/dailytelegraph/story/0,22049,24010820-5001021,00.html

"While Plumpton, near Mount Druitt, was the worst-performing suburb, with negative capital growth of 5.74 per cent in the three months to June and 1.96 per cent in June, Whale Beach came in as the third-worst performer, with negative growth of 3.73 per cent and 1.14 per cent, respectively."


A year of that would see a further 12-24% drop.

So I just read this actual story in the *printed* version of the Sunday Telegraph - makes a good read and has a graphic that doesn't seem to have made it into the online version. And guess what it shows??

Best preforming suburbs based on median house price sales, last 3 months:

Cremorne Point: +7.83%
Cremorne: +7.47%
Tamarama: +6.34%
Watsons Bay: +6.23%
Mosman: +6.17% (that's where you are renting right Pepperoni???)
South Coogee: +6.03%

and so on...... 14 suburbs listed showing growth in the past 3 months with the lowest being 5.44% (there must be dozens and dozens more with 0.x up to 5% as well). This is quite funny considering the article starts with the headline "Housing Market Worst in a Century", and uses the line "Property values in Sydney and across Australia have plummeted", but then goes on to demonstrate that in fact, while SOME area's (mainly "less desirable ones"), have seen declines of 1-5% over the last 3 months, many other "desirable" area's have continued to grow. In fact with the exception of a few anomolies (such as Clontarf, Whale Beach and Palm Beach), nearly all the suburbs shown as having negative growth have the lowest median prices you will find in Sydney - most well under $500k, most in the $300k-$400k range and the lowest being $272k!

Personally what I think is going to happen is the more mortgage stressed area's - ie Western Sydney and many area's in other capital cities such as Brisbane and Perth are going to be the hardest hit - because of the financial stress of the current occupants, coupled with the general unwillingness of many potential first home buyers to consider buying into such areas (they will just keep renting in a "good" suburb waiting forever for the prices to fall into their affordable range!). The market will find it's equilibrium point again soon enough (within 6-12 months I reckon), and then stabalise. Again, If anyone who is not currently in the property market with a lot of equity thinks they will be picking up bargains in Balmoral or Bronte etc anytime soon, well then I think you are dreaming.....

Cheers,

Beej

 

[explod]

14 suburbs listed showing growth in the past 3 months with the lowest being 5.44%. This is quite funny considering the article starts with the headline "Housing Market Worst in a Century", and uses the line "Property values in Sydney and across Australia have plummeted", but then goes on to demonstrate that in fact, while SOME area's (mainly "less desirable ones"), have seen declines of 1-5% over the last 3 months, many other "desirable" area's have continued to grow.

Personally what I think is going to happen is the more mortgage stressed area's - ie Western Sydney and many area's in other capital cities such as Brisbane and Perth are going to be the hardest hit -

Again, If anyone who is not currently in the property market with a lot of equity thinks they will be picking up bargains in Balmoral or Bronte etc anytime soon, well then I think you are dreaming.....

Cheers,

Beej

An anomoly that often missleads is that when they talk of the last three months they are describing the ABS (Australian Bearau of Statistics). The last three months was that ending in March of 08. The real correction downwards only began at the end of that period and will not be reflected in ABS figures properly till those for the end of June which in fact are not published for several months after that, say October.

Having worked professionally in the area of demographics for many years in which we utilised ABS stats it is worth pointing out the one needs to meditate a bit on the figures to get a true picture.

 

[Beej]

An anomoly that often missleads is that when they talk of the last three months they are describing the ABS (Australian Bearau of Statistics). The last three months was that ending in March of 08. The real correction downwards only began at the end of that period and will not be reflected in ABS figures properly till those for the end of June which in fact are not published for several months after that, say October.

Having worked professionally in the area of demographics for many years in which we utilised ABS stats it is worth pointing out the one needs to meditate a bit on the figures to get a true picture.

Nope - not the case here. The article in question clearly states it uses median house price figures to the end of JUNE 08, compiled by Residex. These are very up-to-date figures.

Beej

 

[overlap]

hello,

people can question what the auction clearance rate's mean but it is evident that the head honcho's look at clearance rates,

"in more recent weeks clearance rates have fallen to more stable conditions"

the clearance rates have been around 60-70% for many many months now which the RBA states as more stable conditions, okay

which supports my claim that it is going along nicely,

people please remember I wouldnt have a clue what is going to happen and have NEVER said things are going to rise by 25%/pa, find it if you think I have

i support the occurrence that housing still remains for many people their biggest "investment", and the benefit in senior years are astonishing

thankyou

robots

The last statement is often correct because for some people it happens to be the best investment medium and for others because it's a form of enforced savings where they wouldn't save enough otherwise. And some folks just get lucky.

I won't go into the fallacy of depending on simplistic clearance rate numbers, except to say even if it was true that assumes the world is going to continue as it has been in the past. I wouldn't be too sure about that.

On the subject of the RBA statement. The RBA is speaking a language called Central Banker. Central Banker sounds like English (or whatever language applies), but it's not. It's one of a careful ongoing stream of messages directed at multiple audiences. Central Bankers know that many of their audiences are like flocks of sheep (pollies included); the direct approach is rarely the best and a series of carefully crafted noises and movements does the trick - hopefully.

If you thought the RBA statement supported your assertion on clearance rates, it doesn't. Best go learn some Central Banker. Not that the RBA has too much experience anyway in anything out of the historical square.

Greenspan was the master.
http://www.nationmultimedia.com/2007/04/03/opinion/opinion_30030945.php

 

[robots]

Robots,

Errr. aren't a lot of so-called "honchos" now becoming the severed heads of failed companies and institutions.....???

And generally speaking, the benefit in senior years from owning a property only holds up if an individual has managed to purchase a property under favourable buying circumstances (low interest loans, low market prices) and subsequently they are able to dispose of that property at a good profit (less inflation) - again, under favourable selling circumstances ( high market prices) prior to them moving permanently into some sort of aged accomodation to see out their final years. Market position and timing (which often means a HUGE amount of luck is involved - being born in the right year and place in society etc) is crucial to this.

Right now, I personally would not be trying to give anyone the impression that it is a great time to invest in property.....

Methinks 8%+ interest on bank accounts is looking better every day in the short term....

Chiz,



AJ

hello,

goodluck to all those on the pension and the miniscule super balances in the rental market,

so around 60 with another 20yrs left to live and the things arent looking too good,

you dont have to sell, goodluck

thankyou

robots

 

[pepperoni]

So I just read this actual story in the *printed* version of the Sunday Telegraph - makes a good read and has a graphic that doesn't seem to have made it into the online version. And guess what it shows??

Best preforming suburbs based on median house price sales, last 3 months:

Cremorne Point: +7.83%
Cremorne: +7.47%
Tamarama: +6.34%
Watsons Bay: +6.23%
Mosman: +6.17% (that's where you are renting right Pepperoni???)
South Coogee: +6.03%

and so on...... 14 suburbs listed showing growth in the past 3 months with the lowest being 5.44% (there must be dozens and dozens more with 0.x up to 5% as well). This is quite funny considering the article starts with the headline "Housing Market Worst in a Century", and uses the line "Property values in Sydney and across Australia have plummeted", but then goes on to demonstrate that in fact, while SOME area's (mainly "less desirable ones"), have seen declines of 1-5% over the last 3 months, many other "desirable" area's have continued to grow. In fact with the exception of a few anomolies (such as Clontarf, Whale Beach and Palm Beach), nearly all the suburbs shown as having negative growth have the lowest median prices you will find in Sydney - most well under $500k, most in the $300k-$400k range and the lowest being $272k!

Personally what I think is going to happen is the more mortgage stressed area's - ie Western Sydney and many area's in other capital cities such as Brisbane and Perth are going to be the hardest hit - because of the financial stress of the current occupants, coupled with the general unwillingness of many potential first home buyers to consider buying into such areas (they will just keep renting in a "good" suburb waiting forever for the prices to fall into their affordable range!). The market will find it's equilibrium point again soon enough (within 6-12 months I reckon), and then stabalise. Again, If anyone who is not currently in the property market with a lot of equity thinks they will be picking up bargains in Balmoral or Bronte etc anytime soon, well then I think you are dreaming.....

Cheers,

Beej

I dont think whale beach is exactly mortgage stressed. And there is a bank sale at balmoral NOW that was withdrawn over a month ago for lack of interest and now relisted. There is one for the books.

And as Im looking to buy In mosman/cremorne I know every HOUSE listed and virtually none have sold ... and the ones that did were considered good buying by all. There isnt much you can tell me about the health of this market and its sick .. like a double brick house with pool and views on 850sqm passing in and selling under $2m weeks later. I dont think each suburbs figures are a true indications but across the board the trend is not good. Maybe someone sold their 10m house for 7m which might give a good result on zero volume??

I have seen one GOOD price in northbridge in the quarter, one shockingly bad price, and virtually everything else passed in.

Anyway lets not get too excited ... you sound like a property bull beej. So does robots. Im a confessed bear with the conviction to put almost all my money in cash earning .000000001% real after tax. Only time will tell where things end up.

But to say the fundamentals and indicators are turning against the bulls is an understatement.

 

[Beej]

I dont think whale beach is exactly mortgage stressed. And there is a bank sale at balmoral NOW that was withdrawn over a month ago for lack of interest and now relisted. There is one for the books.

And as Im looking to buy In mosman/cremorne I know every HOUSE listed and virtually none have sold ... and the ones that did were considered good buying by all. There isn't much you can tell me about the health of this market and its sick .. like a double brick house with pool and views on 850sqm passing in and selling under $2m weeks later. I dont think each suburbs figures are a true indications but across the board the trend is not good. Maybe someone sold their 10m house for 7m which might give a good result on zero volume??

I have seen one GOOD price in northbridge in the quarter, one shockingly bad price, and virtually everything else passed in.

Anyway lets not get too excited ... you sound like a property bull beej. So does robots. Im a confessed bear with the conviction to put almost all my money in cash earning .000000001% real after tax. Only time will tell where things end up.

But to say the fundamentals and indicators are turning against the bulls is an understatement.

I'm a long term property bull yes, and unlike you I have a large proportion of my net worth committed to property (however I have been in the game for quite some time). However, I also have no problem with the reality that property prices can and do fall sometimes in the short term, bu I'm not going to sell as you still need somewhere to live!

But what I find amazing at the moment is that an article like the one being discussed above takes such a negative line, and you guys all jump on that, but then when I actually read the PRINT version of the article it pointed out a long list of Sydney suburbs that saw SIGNIFICANT PRICE GROWTH over the past 3 months! The growth numbers in % terms were far greater than than the reported contractions! Re Whale beach and mortgage stress, read what I wrote carefully - with the exception of 3 anomalies singled out by the internet version of that article, MOST of the suburbs registering falls are low median price ($200k, $300k, $400k range), lower socio-economic suburbs - it's there staring at you in the face if you read the print version of the article.

And yet the internet version of that article that people here LOVE to post links to, "conveniently" left that information out. You see right now it sells papers and generates online activity (= advertising $$$) etc to spruik the negative, as people are currently fearful about everything, just like at other times in the past the positive news has sold well.

Good luck with your strategy! The real question you have to ask is how much do you need prices to fall before you would move?? Is that a realistic expectation or not?? If not, then at what point do you re-adjust your bearish view, because if you get it wrong, you could miss out on the best entry point into the market for the next 20 years....

Cheers,

Beej

 

[michael_selway]

I'm a long term property bull yes, and unlike you I have a large proportion of my net worth committed to property (however I have been in the game for quite some time). However, I also have no problem with the reality that property prices can and do fall sometimes in the short term, bu I'm not going to sell as you still need somewhere to live!

But what I find amazing at the moment is that an article like the one being discussed above takes such a negative line, and you guys all jump on that, but then when I actually read the PRINT version of the article it pointed out a long list of Sydney suburbs that saw SIGNIFICANT PRICE GROWTH over the past 3 months! The growth numbers in % terms were far greater than than the reported contractions! Re Whale beach and mortgage stress, read what I wrote carefully - with the exception of 3 anomalies singled out by the internet version of that article, MOST of the suburbs registering falls are low median price ($200k, $300k, $400k range), lower socio-economic suburbs - it's there staring at you in the face if you read the print version of the article.

And yet the internet version of that article that people here LOVE to post links to, "conveniently" left that information out. You see right now it sells papers and generates online activity (= advertising $$$) etc to spruik the negative, as people are currently fearful about everything, just like at other times in the past the positive news has sold well.

Good luck with your strategy! The real question you have to ask is how much do you need prices to fall before you would move?? Is that a realistic expectation or not?? If not, then at what point do you re-adjust your bearish view, because if you get it wrong, you could miss out on the best entry point into the market for the next 20 years....

Cheers,

Beej

Hm is property m,arket ins australia goign up or down in the next few years?

http://www.abc.net.au/lateline/content/2008/s2301788.htm

Stephen Long offers market insights
Print Email
Australian Broadcasting Corporation

Broadcast: 11/07/2008

Reporter: Virginia Trioli

Economics correspondent Stephen Long joins Lateline to talk about the latest in market news.

Transcript
VIRGINIA TRIOLI, PRESENTER: Is Australia headed for a housing market crash? That fears being fuelled by a slump in new home loans.

Economics Correspondent Stephen Long joins me to discuss this now.

Stephen, how bad is it looking?

STEPHEN LONG, ECONOMICS CORRESPONDENT: Well, it's pretty bad. We've just seen the worst monthly fall in eights years in new home loans and if you look at the past four months, it's the biggest fall on record. So, things are not good. The market is clearly flat. Housing finance is drying up. People aren't taking out loans and, really, in some ways, at least on some of the measures, it's the worst we've seen it.

VIRGINIA TRIOLI: It's interesting to think about what's driving this because in a sense you've almost got a perfect storm, haven't you, of all these elements coming together?

STEPHEN LONG: Indeed.

VIRGINIA TRIOLI: Tell us what they are.

STEPHEN LONG: Well, you've got the credit crunch which has driven up the cost of finance and you've got the global uncertainty, which is making people reluctant to do anything. And so, you've got a situation where people aren't selling 'cause they think the market's bad and people aren't buying 'cause they're uncertain. But the broader factor here I think is that the housing market gains when we saw house prices rising by 10, 20 per cent a year, going back a little ways, was essentially a bubble driven by cheap debt which was readily available and now the cheap debt is gone and debt is expensive and it is far less readily available, with credit standards being really ramped up, and so the market's tanked. Things have got bad, the finance just isn't there. That's the big driver for what we're seeing.

VIRGINIA TRIOLI: But we're only talking here about new home starts, which is not a complete portrait of what's going on then in the property market, is it?

STEPHEN LONG: Well, this is finance for home loans for owner occupiers. So this is your benchmark housing finance and it's looking pretty bad. Is it a complete portrait? Well, no. I mean, in some ways there's possibly going to be a floor under the market in Australia. We might not see things get as bad as they are in the US, for instance, because of the fact that we have rising population through immigration, new household formation. We're not actually producing enough new homes to meet all that demand.

VIRGINIA TRIOLI: No, there's actually a housing shortage.

STEPHEN LONG: Yes, yes. But, that said, I still think we're going to be looking at house price falls because of that drying up of finance. We've got that situation where you saw those huge house price gains driven by the availability of credit and economists who look narrowly at supply and demand just miss that factor. That's the big bad news here.

VIRGINIA TRIOLI: Alright, so another bad story in the offing. Stephen Long, thank you.

STEPHEN LONG: You're welcome.

http://www.abc.net.au/reslib/200807/r270718_1137813.asx

thx

MS

 

[pepperoni]

I'm a long term property bull yes, and unlike you I have a large proportion of my net worth committed to property (however I have been in the game for quite some time). However, I also have no problem with the reality that property prices can and do fall sometimes in the short term, bu I'm not going to sell as you still need somewhere to live!

But what I find amazing at the moment is that an article like the one being discussed above takes such a negative line, and you guys all jump on that, but then when I actually read the PRINT version of the article it pointed out a long list of Sydney suburbs that saw SIGNIFICANT PRICE GROWTH over the past 3 months! The growth numbers in % terms were far greater than than the reported contractions! Re Whale beach and mortgage stress, read what I wrote carefully - with the exception of 3 anomalies singled out by the internet version of that article, MOST of the suburbs registering falls are low median price ($200k, $300k, $400k range), lower socio-economic suburbs - it's there staring at you in the face if you read the print version of the article.

And yet the internet version of that article that people here LOVE to post links to, "conveniently" left that information out. You see right now it sells papers and generates online activity (= advertising $$$) etc to spruik the negative, as people are currently fearful about everything, just like at other times in the past the positive news has sold well.

Good luck with your strategy! The real question you have to ask is how much do you need prices to fall before you would move?? Is that a realistic expectation or not?? If not, then at what point do you re-adjust your bearish view, because if you get it wrong, you could miss out on the best entry point into the market for the next 20 years....

Cheers,

Beej

Ill buy tomorrow if I find the right property. But I dont see any need to rush in this market nor are there many rushed punters left out there.

In fairness to that article, Residex chief executive John Edwards, probably the only more bullish aussie than robots, said "Never in my lifetime have I seen so many converging negative events."

And in fairness to him, with rates and fuel spiking , loan applications crashing, the signs cant be much worse. Fuel alone jut hit another record and the csiro is talking $8/l fuel within years.

On top of that, ON AVERAGE Residex reports the current median house value in Sydney is down 1.05 per cent in June. If it continues it will be 12% annual fall.

Yes some areas may still be doing well, or there may be some anomalies in the short term numbers in small markets, but I wouldnt say the article is over the top as there isnt much good news for the bull right now.

 

[singlefished]

First time poster in this thread.... long time lurker however.

I thought this article from news.com might be quite appropriate in this discussion.

Posh pad owners too ashamed to advertise

• Homeowner's don't want neighbours to know they have to sell
• Agents instructed to advertise homes "on the quiet"
• Embarrassing home sale "may affect owner's work image"

PEOPLE struggling with huge mortgages in wealthy suburbs are selling their multi-million-dollar properties on the quiet so business associates and neighbours don't know they are in financial strife.

http://www.news.com.au/business/money/story/0,25479,24009975-14327,00.html

Cheers,
Scotty....

 

[Aussiejeff]

First time poster in this thread.... long time lurker however.

I thought this article from news.com might be quite appropriate in this discussion.

Posh pad owners too ashamed to advertise

• Homeowner's don't want neighbours to know they have to sell
• Agents instructed to advertise homes "on the quiet"
• Embarrassing home sale "may affect owner's work image"

PEOPLE struggling with huge mortgages in wealthy suburbs are selling their multi-million-dollar properties on the quiet so business associates and neighbours don't know they are in financial strife.

http://www.news.com.au/business/money/story/0,25479,24009975-14327,00.html

Cheers,
Scotty....

WOT???!!! A *silent* Private Selling Epidemic by The Posh to save us the embarrassment of seeing their acute embarrassment?

How embarrassing!


AJ

 

[white_goodman]

First time poster in this thread.... long time lurker however.

I thought this article from news.com might be quite appropriate in this discussion.

Posh pad owners too ashamed to advertise

• Homeowner's don't want neighbours to know they have to sell
• Agents instructed to advertise homes "on the quiet"
• Embarrassing home sale "may affect owner's work image"

PEOPLE struggling with huge mortgages in wealthy suburbs are selling their multi-million-dollar properties on the quiet so business associates and neighbours don't know they are in financial strife.

http://www.news.com.au/business/money/story/0,25479,24009975-14327,00.html

Cheers,
Scotty....

why the hell would you get a multi-million dollar mortgage

 

[Tysonboss1]

why the hell would you get a multi-million dollar mortgage

because your not good at managing money and you would rather over extend your self an have the apperance of wealth, instead of living simplier and actually be wealthly...

High income earners are some of the least wealthly people in our society.

 

[Mofra]

High income earners are some of the least wealthly people in our society.

True. One measure of wealth is to see how long you would last if you lost your job/company tomorrow. The balance sheet of many higher income earners shows a surprising lack of restraint when it comes to personal effects.

 

[numbercruncher]

Seems residex is publishing Bearish data ! wtf is that all about !

Property nearing once-in-100-year slump

Half of all houses lost value last month
Last time that happened was before the Depression


PLUMMETING property values have prompted warnings Australia is heading for a one-in-a-100-year real estate slump.

New figures from property analyst Residex showed house and unit prices in nearly every city and country centre fell last month. The last time all states fell at the same time was just before the Great Depression.

http://www.news.com.au/heraldsun/story/0,21985,24012370-5015810,00.html


Yup yup , screw the fundamentals, hell even throw commonsense right out the window ..... " House prices to keep rising for years "

 

[robots]

hello,

great news with Glenn Stevens from RBA having a few words today,

life is just great, the day of easy credit "maybe" back in town many will cry

thankyou

robots

 

[WaySolid]

hello,

great news with Glenn Stevens from RBA having a few words today,

life is just great, the day of easy credit "maybe" back in town many will cry

thankyou

robots

This was an interesting data point. He might not be any better an interpreting the future, but he does have some say over how the crystall balls are constructed!

I'm still of the view that the IR cycle is near peak, but who really knows?

 

[robots]

This was an interesting data point. He might not be any better an interpreting the future, but he does have some say over how the crystall balls are constructed!

I'm still of the view that the IR cycle is near peak, but who really knows?

hello,

yeah spot on waysolid,

diversification i guess

thankyou

robots

 

[chops_a_must]

Let me get this straight.

With banks going bust, people are honestly expecting the cost of lending to go down?

Pass the bong please.

 

[nunthewiser]

LOL agrees with chops , yeah pass it here so we can view the journey to 12.5% plus with a lil humour at least ........