House prices to keep rising for years

[2BAD4U]

Here in the west where we do dig up dirt and ship it the BHP news today has really shaken a lot of cages unfortunately agriculture is also taking a dive income down 40% according to a headline the other day.

Income may be down but so are input costs (grain, fuel, etc). This flows on to cheaper food. Cheaper food, fuel and mortgage repayments puts money back in peoples pockets and takes the pressure off. I'm sure most of you know someone who 6-12 months ago were thinking of selling but have changed their minds now.

With regard to BHP, Ravensthorpe (and surrounding areas) will suffer declines in house prices, this won't necessarily have as big an impact in Perth, still plenty of work for trades people. Other states will be impacted upon slightly as many who escaped through the rabbit proof fence seeking those mythical big bucks, return home. Depends on what they did when they moved here. Did they sell up and were saving. Did they pay off their house over the last few years.

You also have to consider the one's that don't have property and blew it all on booze, cars and jet skis. If you're in the market for a V8 ute or jet ski, there will be some cheap ones on the market soon.

 

[Glen48]

Lioness,
50% off house prices you are game I will buy in when they get below that figure.
Just keep watching Patrick.net to find out when to buy back in and see what we have ahead of us.
Shopping centers are starting to close 3 week after the $10.4 B went in.
George Soros is quoting 90% so I am picking about 70-80% and will pay cash from the profit I make on Gold, if I can get it off my Wife that is.
Then B.O. could preform a some magic trick/s....not

 

[2BAD4U]

George Soros is quoting 90% so I am picking about 70-80%

That means you could pick a unit for about $20k - $50k and a house for about $30k - $80k. Yeah right. :screwy:

For that to occur you would basically have no demand for housing AT ALL. No first home buyers, no investors, no people moving into their 2nd or 3rd property. Your scenario means that people will no longer need the basic necessity of shelter.

"But there's going to be mass unemployment and with negative equity people will be forced to sell." OK, but they still have to live somewhere so investors start buying property (oops we have demand) and suddenly there are more renters on the market (but rents will fall remember). Based on those figures and rent of $250 / wk (becuse you seem to think that rents will fall) that means a return of between 16% - 65%.

Now with interest rates at 5% that means any property returning more than 5% net is a cash positive investment. So for your scenario to occur (no demand) every single person would ignore the opportunity to create an income stream..........something that just won't happen.

But hey, if you're right then I'll buy 100 houses and a 65% yield I'll make millions.

 

[lioness]

Lioness,
50% off house prices you are game I will buy in when they get below that figure.
Just keep watching Patrick.net to find out when to buy back in and see what we have ahead of us.
Shopping centers are starting to close 3 week after the $10.4 B went in.
George Soros is quoting 90% so I am picking about 70-80% and will pay cash from the profit I make on Gold, if I can get it off my Wife that is.
Then B.O. could preform a some magic trick/s....not

Glen, don't get carry away with that website, it is USA brainwash material. same rules dont apply here such as non recourse, no doc making up most of leverage, over supply etc etc. We have gone over all this. Expect a 30% fall and load up I say.

 

[Glen48]

That's what is happening in USA and 09 is worse that 08. We owe more than USA per head but not as much as UK.
We have been living on borrowed time due to the Games.
Over 7,000 lost their jobs to day, that we know of, 3 weeks into the New Year and more bad news in the Morning.
The credit bubble gets every on who deals with Money any where in the World.
We have to wait until 2014 before any sign of things improving.

 

[MrBurns]

Any more than 30% and you're looking at a real disaster here.
I think 30% would pull it up.

 

[Glen48]

Sales in the city of Toronto are off 54 per cent in the first 15 days of 2009, while prices are down more than $40,000 for the average home. Homes in the suburbs were not hit as hard, with sales down 47 per cent and prices off $26,000.
If this can happen in Toronto it can happen any where.
The credit bubble is not forgiving.

 

[satanoperca]

Hi,

While it seems extremely unlikely that we would see falls of more than 20%, 60% is not impossible. I would buy at a 10-20% fall if I felt the conditions where feasible for my own personal situation (i.e. inflation is controlled, unemployment was <8%, IR <8% and growth was > = inflation). I may not be willing to buy at a 60% reduction. Why? For this to occur the environment may have changed from wanting a roof over my head and the ability to find work to just surviving as we often see in war (deflation, IR rates 0, employment nowhere to be seen, growth <0%). One can always create feasible scenarios to provide credence to most statements, whether they come true or not is another thing.

Heavy price reduction across the board means lifestyles as we currently have would have to change severely. Will this happen, I don't now but the governments around the world are trying to sort credit/debt problem out so it must be kinda bad. While the issue of using tax payers money to prop up an outer control industry seems wrong. Using debt to inflate asset prices for short term gain is not feasible in the long run, if we all wanted to live in a great society like we have today.

Please no-one call me a newbie as has occurred in another forum when giving an opinion that it is not implausible for house prices to drop more than 20%.

I admit I little about anything, but I would like to express an opinion and open it up to constructive criticism.

 

[Beej]

A credit bubble is only a bubble if a significant proportion of the money lent will never likely be paid back - al la US sub prime.

In Australia, our interest rates were very high by world standards while the US and even the UK had virtually free money for half a decade. I know - I spent considerable time in and did business in the US during this period and the conditions over there wrt to availability of finance were COMPLETELY different to the situation here. Consequently, as our interest rates drop, even with rising unemployment - short of absolute economic disaster - the odds of credit that came into existence in the last 10-15 years being repaid are actually increasing, rather than decreasing. This applies especially to credit associated with housing, rather than business finance. It's business loans in reality is where most credit associated risk currently lies in this country.

I just don't see why you all think that everyone that owns property is suddenly going to decide to sell it a rock bottom price! Why would they? If they have no mortgage, even unemployment is manageable. If they have a mortgage and a job, loan servicing costs and living costs are falling and only going to get lower over the next year. There will be the odd forced sale but the wholesale crash many are looking for is still fantasy land.......Anyway, as soon as anyone has some significant AUSTRALIAN stats that prove me wrong please post them - I've been waiting for the past year nearly for that to happen so far nada of any significance, and plenty of stats/evidence to the contrary.

Cheers,

Beej

 

[MrBurns]

The prices will take around 2 years to retreat fully.
Some forced sales, other sales just as a matter of course but the prices wont be there, so they sell at market or not at all so the next house is valued down and so on.
Those with no mortgage dont care, why should they.
Rock bottom prices ? what's that ? the price is the market price, doesnt matter if you're buying and selling on the same market.

 

[nomore4s]

Hi,

While it seems extremely unlikely that we would see falls of more than 20%, 60% is not impossible. I would buy at a 10-20% fall if I felt the conditions where feasible for my own personal situation (i.e. inflation is controlled, unemployment was <8%, IR <8% and growth was > = inflation). I may not be willing to buy at a 60% reduction. Why? For this to occur the environment may have changed from wanting a roof over my head and the ability to find work to just surviving as we often see in war (deflation, IR rates 0, employment nowhere to be seen, growth <0%). One can always create feasible scenarios to provide credence to most statements, whether they come true or not is another thing.

Heavy price reduction across the board means lifestyles as we currently have would have to change severely. Will this happen, I don't now but the governments around the world are trying to sort credit/debt problem out so it must be kinda bad. While the issue of using tax payers money to prop up an outer control industry seems wrong. Using debt to inflate asset prices for short term gain is not feasible in the long run, if we all wanted to live in a great society like we have today.

Please no-one call me a newbie as has occurred in another forum when giving an opinion that it is not implausible for house prices to drop more than 20%.

I admit I little about anything, but I would like to express an opinion and open it up to constructive criticism.

I generally agree with your post. If we start to see falls greater than 50% across the board very few people will be in a postion to take advantage of it, we may all just be concerned with survival.

Alot will depend on how bad unemployment gets imo.

 

[nomore4s]

Beej, while your post has some merit, the fact is there has been a global credit bubble and saying that just because our default levels won't be as high as the US doesn't change this fact.
The fact Aussie banks in the last 6 or so months have raised thier provisions for bad debt by quite a bit should be a warning sign that not all is well, and shows the Aussie banks haven't been as strict with thier lending as they should have been. If unemployment continues to rise we will see an increase in default rates in Oz.

Also it won't just be an increase in supply that will have an effect on the property market but reduced demand as loans become harder to qualify for, credit has been extremely easy to get in the last few years but this is changing very rapidly.
Also bank valuations on property will continue to be lower as the banks become more conservative in thier estimates. This will mean you will have to have a larger deposit.
Eg - You want to buy @ $300,000 but bank values it @ $250,000 and will therefore only lend you 95% of $250,000 ($237,500) so instead of needing a $15,000 deposit you now need a $62,500 deposit.
This will also have an effect on the market imo.

But you are right about the fact we are yet to see this play out in Oz and we may get extremely lucky and not see it happen here but as more and more info comes out I feel that we will see things deteriorate badly in Oz.

 

[Glen48]

If USA prices are down to $500 for a house and Counties are leasing their street to finance their ongoing cost why wont the same happen here?
USA un-employment is about 10 to 20% depending where you get your figures from.
Plus USA took out a loan over Xmas:
http://static.seekingalpha.com/uploads/2009/1/20/saupload_scary_2.jpg

 

[So_Cynical]

I just don't see why you all think that everyone that owns property is suddenly going to decide to sell it a rock bottom price! Why would they?

I wonder how many share holders sold to make the stock market crash 50%?..i reckon
u only need 10 or 15% of any market to sell, to drive the price of anything lower.

 

[wayneL]

I wonder how many share holders sold to make the stock market crash 50%?..i reckon
u only need 10 or 15% of any market to sell, to drive the price of anything lower.

Equally pertinent is that there are just as many shares on issue now as a year ago, therefore probably the same number of shareholders. All that has happened is that shares have changed hands at a lower price.

 

[numbercruncher]

Hello,


Hows the realestate "boom" going ?


Thankyou

 

[prawn_86]

I just don't see why you all think that everyone that owns property is suddenly going to decide to sell it a rock bottom price! Why would they?

This is the typical bull quote when things start to fall.

Look at almost any stock thread 18 months ago and you will see people saying things like, "I dont understand why someone is selling now when the fundamentals suggest the share is worth $X". It doesnt stop people selling just because the price has fallen, thats the beauty of a free market

 

[knocker]

Hello,


Hows the realestate "boom" going ?


Thankyou

Hello,

Word is robots just overdosed in lovely St Kilda.

thankyou

 

[Aussiejeff]

If USA prices are down to $500 for a house and Counties are leasing their street to finance their ongoing cost why wont the same happen here?
USA un-employment is about 10 to 20% depending where you get your figures from.
Plus USA took out a loan over Xmas:
http://static.seekingalpha.com/uploads/2009/1/20/saupload_scary_2.jpg

Oh, poor child - you look a bit stressed. Here you go - puff on some of these new fangled Obama-Lite ciggies. They'll make you imagine everything is ok.

Feeling better now??

*coff*
*splutter*

 

[knocker]

Oh, poor child - you look a bit stressed. Here you go - puff on some of these new fangled Obama-Lite ciggies. They'll make you imagine everything is ok.

Feeling better now??

*coff*
*splutter*

so that was what those 2 million people were doing in washington. lol
God bless america

p.s. you better pass some of the whacky tobacky to robots as well.