House prices to keep rising for years

[Bronte]

Todays 'The West Australian' reports another property boom in 2010:
http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=97537

 

[robots]

hello,

hello hello, great day yesterday with clearance rate going to 68%

clearly indicates the resilience of property,

have a great day to all those putting in the hard yards

thankyou
robots

 

[blogs]

I have a question-without a dramitic increase in wages (inflationary..) how can there be any more scope for significant growth in R.E without a considerable increase in the level of debt, a level that already far out strips the rest of the world?

 

[robots]

hello,

not everybody on a pittance blogs,

i wouldnt be to concerned about inflation its a given and really means jack in australia

most of the debt is in the hands of renters with 10+ credit cards, this is mainly due to such low rents,

this is slowly changing as rents increase and credit card debt is slowly reduced,

thankyou
robots

 

[YChromozome]

Blogs, your spot on and this is why housing markets are collapsing around the world. The average owner can no longer service the debt at those prices.

most of the debt is in the hands of renters with 10+ credit cards, this is mainly due to such low rents,

What Robots is really trying to say here is at Jun 08;

Owner Occupier's have an aggregate of $664.7 billion in debt,
Housing Investors have $304.4 billion in debt, and
Other personal is $153.8 billion.

The other personal includes margin lending, personal, credit card (revolving credit etc).

Credit cards make up $43.64 billion; balances actually increased 1.4% for the year so again I don't know where Robots is getting his information about it slowly going down. If anything, maybe renters are putting their rent on Credit Cards to make ends meet?

So in summary where robots say "most of the debt" is in the hands credit card holders, he actually only means 3.8%, not anywhere near 50% plus. However do not that revolving credit does attract higher interest rates and hence is more expensive to service.

 

[Beej]

I have a question-without a dramitic increase in wages (inflationary..) how can there be any more scope for significant growth in R.E without a considerable increase in the level of debt, a level that already far out strips the rest of the world?

This might effect/limit achievable growth for AVERAGE prices across an entire region/country, but it won't stop price growth for well located property in area's where there can be little/no new supply - property prices will continue to grow faster than infaltion in such area's due to ever increasing demand + no new supply. Ie more and more high income earners/wealthy people as the population and the economy grows. It's not rocket science.

In addition, there is a thing called saving as well! When you go through periods of flat or even falling average/median prices, plus a soft market where not many people are buying/selling - what do you think all the POTENTIAL buyers are doing? They are saving more and more $$$ is what they are doing. Eventually that demand (and all that money) comes back into the market.

Oh and PS: Wages CAN and do increase dramatically in real-terms (= NON inflationary) due to increased/improved productivity in an economy, plus a focus/shift of investment to the most profitable industries over time. Long term that will also underpin growth in the average property prices.

Cheers,

Beej

 

[robots]

hello,

i thought renting is the best thing going around, why would they use credit cards to survive?

and its still strange the ABS reports owners are still some 6x wealthier than renters, awesome results

surely this stat must be changing with all the renters around who are gun specuvestors on the trading markets

yes around the world but not AUstralia,

thankyou
robots

 

[Beej]

Oh and FYI - a house in the area I live in Sydney just sold for a RECORD price for the street it is on last weekend at Auction. 9 bidders going for it - beat the reserve price by +$170k! And the reserve price was at the higher end of what was expected in this current market.

Yesterday's Sydney auction clearance rate (inclusive of any withdrawals) 59% - not a bad result at all. Volumes still not high though - 101 sold, median price $659k. Figures from: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Cheers,

Beej

 

[YChromozome]

In addition, there is a thing called saving as well! When you go through periods of flat or even falling average/median prices, plus a soft market where not many people are buying/selling - what do you think all the POTENTIAL buyers are doing?

Are you sure they save rather than retail theory?

The idea of saving went out in the 90's.



We now spend more than we earn, year in, year out. but don't worry, it's all quite sustainable!

 

[Beej]

Are you sure they save rather than retail theory?

The idea of saving went out in the 90's.

We now spend more than we earn, year in, year out. but don't worry, it's all quite sustainable!

I think you will find that people looking to buy a house save quite a bit of their $$$! Remember at any point in time there are only so many people as a proportion of the population looking to buy a house (maybe 5%? Even less?). The rest of your data comes from:

a) No hopers who will never accumulate any real wealth or assets in their lives (maybe 20-25% of AU population??)

b) People who already have assets and use all their cash to pay down mortgages, invest in superannuation etc, rather than put cash in the bank, which gives the worst after tax return than anything else you could do bar flushing your money down the toilet!

Remember those figures you posted to not include superannuation savings/investments right?? Lies, damn lies, and statistics.....

I know I personally have zero savings that would show up in those stats, and every month I have a decent CC bill showing up as "debt". So I add to the negative net savings picture there. And yet, I spend far less than I earn, own growth assets of various classes, never pay any interest on my CC, or non tax deductible interest on any other loan, and have a high degree of financial independence to boot - strange isn't it??

Cheers,

Beej

 

[Macquack]

Oh and PS: Wages CAN and do increase dramatically in real-terms (= NON inflationary) due to increased/improved productivity in an economy, plus a focus/shift of investment to the most profitable industries over time. Long term that will also underpin growth in the average property prices.
Cheers,
Beej

You could get a job with the Reserve Bank with spin like that.

 

[Beej]

You could get a job with the Reserve Bank with spin like that.

Seriously, why do you see my statement as spin?? It's the basic fundamental fact behind the vast improvements in livings standards in the whole western world since the beginning of the industrial revolution?????

Beej

 

[robots]

hello,

http://www.theage.com.au/national/auction-clearances-surge-20080914-4gb0.html

wow, huge weekend

so much for thousands of properties for sale,

thankyou
robots

 

[Junior]

hello,

i thought renting is the best thing going around, why would they use credit cards to survive?

and its still strange the ABS reports owners are still some 6x wealthier than renters, awesome results

surely this stat must be changing with all the renters around who are gun specuvestors on the trading markets

yes around the world but not AUstralia,

thankyou
robots

I don't even know where to start. Firstly, where are these stats that show 'renters have 10+ credit cards'? You have pulled this from thin air. Secondly home owners are wealthier than renters BECAUSE THEY ARE OLDER, and most have experienced a low interest rate, credit expansion fuelled housing boom. Thirdly, 'renters are gun specuvestors on the trading markets'....I won't even bother with this one.

 

[robots]

hello,

look out look out, here we go here we go,

http://www.news.com.au/business/story/0,23636,24347522-14334,00.html

another one drops the rate again, all of a sudden that debt is looking very cheap to maintain,

any info out on rents dropping like rates?

more great news out with building starts dropping, the HIA guy from Insight is looking a bit brighter than Mr Keen now i believe, but hey he (HIA guy) doesnt have a blog so anything from him is questionable i guess

thankyou
robots

 

[pepperoni]

more great news out with building starts dropping, the HIA guy from Insight is looking a bit brighter than Mr Keen now i believe, but hey he (HIA guy) doesnt have a blog so anything from him is questionable i guess

The stupidity of these posts is becoming a forum disgrace.

And on roll the not so subtle personal attacks on other far more polite and knowledgable forum members.

Im boycotting this thread until robots' unending nosense is sorted out as happened on somersoft ... ill be on the other thread when there is something of substance to discuss.

 

[robots]

hello,

no worries pepp's, actually over at Somersoft i receive a positive private comment for most of my postings,

i have seen them come and go there too,

goodluck bro, we all walk out as friends

thankyou
robots

 

[robots]

hello,

good evening,

http://compareshares.com.au/show_news.php?id=S-515054

more rate cuts on the way, and as total annihilation whips through the world and all the "fake" companies on the exchange's, we all know what is left standing down the road?

you got it brothers, bricks & mortar

thankyou
robots

 

[Beej]

An interesting quote from the article above posted by robots:

JP Morgan chief economist Stephen Walters said dwelling starts of around 153,000 a year based on Monday's figures was well below the 173,000 needed to satisfy demand.

This 'underbuild' helps to explain why house prices have held up, despite poor affordability, and why residential rents have been rising at the fastest pace for two decades," he said.

This is exactly what many have of us have been pointing out on this and the other house price thread. There opposing fundamentals here stopping the market *currently* from moving too strongly either up or down.

Cheers,

Beej

 

[SBH]

Ahhh must be great to have statistics from ABS and others reassuring you that everything is going to be allllllllllright. In the real world noone is hiring right now and rents are falling. Also in approx 1/2hr the US financial system will fall off the cliff. The house of cards (housing boom) built on cheap money from the likes of lehmann brothers doesnt have a hope of surviving this.

One other thing, how long can housing remain stationary when fewer and fewer people believe it can rise further? Think about it! Why risk money on housing for no conceivable gain? Thats the position housing is in today. Tomorrow you have to deal with an even greater cost for new lending and a certain economic recession in the US, surely this equals a slump?