House prices to keep rising for years

[dirty_harry]

??? wtf ....

We talk suburbs and you bring up countries and a city .... always changing the goal posts ...

Im not sure what your saying .... is it that detroits median is 10k because of black people ?? Because realists would say it because of a collapsed Auto industry and mass exodus of people from the city regardless of colour ...

But Australian permabulls live in an altered reality so nothing you guys say surprises me anymore ....

And yes I do realise that some suburbs have depressed prices because they become ethnic ghettos etc ....

Detroit started it's decline after the black riots in the 70's after which many companies pulled out. Yes the auto industry is collapsing but it hasn't yet completely due to ongoing bail outs, so things could get much worse in future years. There are many suburbs in big cities in the US that are close to no go areas unfortunately which is sad but it is a fact. As for WA looks like some retracement of the mining boom house prices, but I don't expect the median prices to come down to 10,000. Also I don't expect WA to deteriorate so much for there to be drive by shootings and drugs on each 2nd corner. Hopefully anyway at least !!

 

[2BAD4U]

Awesome your article compares 1911 to 2006 mine compares 1986 to 2006.

Ummmm......My article was the overview of yours FROM THE SAME SOURCE providing more of a detailed explaination of the figures rather than just the one piece you decided to latch on to.

Just consider me your compass, pointing you in the right direction, in these misguided times.

 

[numbercruncher]

Hello,


" House prices to keep rising for years " - Still no proof since this thread started a year ago.

Nice lush wet and green up here in the Gold Coast hinterland today. Might stop in the Tea house for some detox and watch the world go by. Nirvana.

Thankyou...

Numberbots.

 

[Beej]

Meanwhile in the UK:
I offered £1400 on a place that was listed at £1650... the LL (a first timer and accidental LL) knocked it back, but the agent thinks they're nuts. "Reality will hit them sooner or later... £is about right at the moment" is what he said. Reckons last year they could have gotten £1700 easily.

Oz LLs should prepare for that possibility.

I'd be more than happy to prepare for rental prices and yields equivalent to the UK/London, even with 25% falls over there! That would equate to some unbelievable rental price growth here in Oz........

Eg - what were you going to get for £1400/month? A 2 bed flat? That's about AU$720/week! A friend of mine in London years ago was paying £450/week (AU$1000/week) for a 3 bed flat in Islington.....

So if AU property market is going to be the same as UK be careful what you wish for..... Or are they actually different in many respects for various reasons after all???

New releaase from ABS ....... raises a Q or 2 ....

http://www.abs.gov.au/ausstats/abs@.nsf/MediaRealesesByCatalogue/C9B7D8423519C6F7CA25754C0025E098?OpenDocument

As already covered by other posts, that's an interesting paper and what it really shows are demographic, lifestyle, and living standard changes/improvements over this time. How many people live in your house NC?? Do you REALLY wish for a regression of living standards across the board?

Cheers,

Beej

 

[kincella]

couple of points..
nc said no proof of rising house prices.....
here is st kilda for you...+ 10%.....there are plenty of suburbs that have risen
http://pvg.webcentral.com.au/propertyValueGuideChart.asp

and
heard on bbc radio this morning....the unofficial message from swan...and he was heard to say...he has 400 points to play with...being the difference between our rate of 4.25 and the US rate of .25.....
thats what he said when he addressed whatever meeting in the US last week...
wish they were brave enough to drop it 2% now....there has been nothing but bad news from all sectors so far...and its only going to get worse
cheers

 

[MrBurns]

couple of points..
nc said no proof of rising house prices.....
here is st kilda for you...+ 10%.....there are plenty of suburbs that have risen
http://pvg.webcentral.com.au/propertyValueGuideChart.asp

and
heard on bbc radio this morning....the unofficial message from swan...and he was heard to say...he has 400 points to play with...being the difference between our rate of 4.25 and the US rate of .25.....
thats what he said when he addressed whatever meeting in the US last week...
wish they were brave enough to drop it 2% now....there has been nothing but bad news from all sectors so far...and its only going to get worse
cheers

Gee dont you feel just great having Swan as treasurer at this particular point in history

 

[gfresh]

Banks still have to obtain that funding be able to offer it to consumers at those low rates for it to have any impact...

What's the *real* interest rate in the US to actually borrow a property? You would think with 0% interest rates I'd be somewhere near 2% right? It's not It's more like 5-6% link: http://www.bankrate.com/

If rates were to go down to 3.x% from our banks, I think we'd almost have the cheapest bank interest rates in the world. That can't be too good for landlords either... same price to buy as rent

 

[gfresh]

According to my lovely spreadsheet.. assuming 4.0% variable rate, mortgage payments would be $342 with a pithy $5k down on a $330k property. That's only $42 more than rent goes for in my area for those priced properties.

But house prices to crash 50% ? not looking likely for the bottom of the market..

 

[kincella]

2 cents worth...current govt....meeting, thinking, working on it....but nothing is actually happening.....swan is a goof....and it shows

cba current offer 5.14 variable rate.

 

[wayneL]

Eg - what were you going to get for £1400/month? A 2 bed flat? That's about AU$720/week! A friend of mine in London years ago was paying £450/week (AU$1000/week) for a 3 bed flat in Islington.....

Beej

Yep a two bed flat....

.... in a portered and gated mansion block with underground parking, right across the road and overlooking the Wimbledon common, 5 minutes walk from The Championships. Two bathrooms (marble) and big rooms.

And worth mentioning that these particular flats have been selling for about £500,000. (last sale mid 2008)

That's value dude.

 

[nunthewiser]

Yep a two bed flat....

.... in a portered and gated mansion block with underground parking, right across the road and overlooking the Wimbledon common, 5 minutes walk from The Championships. Two bathrooms (marble) and big rooms.

And worth mentioning that these particular flats have been selling for about £500,000. (last sale mid 2008)

That's value dude.

could always shack up with the wombles and share the cost

 

[singlefished]

Ooops...

Vic house prices dropped 10pc in 2008: REIV
Friday January 30, 2009, 12:50 pm

http://au.biz.yahoo.com/090130/31/24avo.html

 

[kotim]

The world is coming to an end, at least a financial end for a lot of people. The lower the interest rates the worse that follows. It is as simple as that. Lets say interest rates get down to 3-4% (conceivable in the next 6 months) for borrowing purposes. The problem is that people borrow the maximum or thereabout, that is human nature, so imagine what is going to happen when eventually the bottom occurs as a whole and the world starts growing again and interest rates start going up again. Imagine the devastation of interest rates going from 4% to 6% or in other words a 50% increase in repayments. Most people do not fix interest rates.

So we are setting ourselves up for many years of relatively low or no growth with a lot of years of floating about.

So far we have seen a 5-10% average fall in house prices, so if we don’t see substantial falls in house prices in the next 6 months then people are going to be borrowing money for relatively all time high house prices with all time low interest rates.

So we are left with two scenarios. We hit a bottom and start to see good growth, which will in some form or another lead to interest rate rises, or we don’t see much interest rate increases because there is not much growth, in other words a much longer term recession type economy.

 

[IFocus]

So basically, the construction industry cannot survive on its own merits; it needs taxpayer funds to support it.

hmmmm, what's that telling us?

LOL WayneL

Desperation but no one is listening, the thought that the Government can actually replace a functioning boom economy with the equivalence of throwing a couple of coins around..............well it's not currently working any where else.

Fortunately we haven't seen the full blow torch here yet and hopefully we wont but then that's a lot of hopeyium

 

[gfresh]

Vic house prices dropped 10pc in 2008: REIV

REIV admits defeat!! Who would have thunk it..We cannot spruik no more cap'in Enzo


Oh my.. keeps getting worse doesn't it on the Crashcoast..

http://www.theaustralian.news.com.au/business/story/0,28124,24976946-25658,00.html

another: http://www.goldcoast.com.au/article/2009/01/29/43795_gold-coast-business.html

He said his experience was that on cheaper properties, financiers were taking what they could get, but for those in the millions, they were not prepared to sell at such a substantially reduced price.

Dean Dransfield, of the consultancy firm Dransfield Hotels & Resorts, said mezzanine financiers were active in the Southport area.

Mr Dransfield said his company was now conducting a presentation to bankers.

Most of the resorts on the coast were now owned by the banks because the value had been eroded. "They are reluctant resorters," he said.

"The first wave is the mezzanine funders, now there is the traditional lenders."

Well guess what, you're going to have to..

Figures from the Midwood Queensland Investment Report, for the November quarter of 2008, show there were 2777 new high-rise apartments for sale, compared with 1780 in the previous quarter. But there had been only 113 sales in that quarter compared to 394 during the same time in the previous year.

So at current rate it's going to take 6 years to sell them all . Now *those* properties are the sorts to easily drop 50%

 

[ROE]

Ooops...

Vic house prices dropped 10pc in 2008: REIV
Friday January 30, 2009, 12:50 pm

http://au.biz.yahoo.com/090130/31/24avo.html

Nah cant be right house price double every 7 years
-ve cash flow is real good for you in the long run.
It's fashionable to be into negative gears cos everyone is doing it.

 

[Beej]

Ooops...

Vic house prices dropped 10pc in 2008: REIV
Friday January 30, 2009, 12:50 pm

http://au.biz.yahoo.com/090130/31/24avo.html

Most of that fall is "old news" - actual REIV release is here: http://www.reiv.com.au/news/details.asp?NewsID=736

Records a 0.9% median price fall from Sep08 -> Dec08 quarter ($430k -> $426k). Looks more like the market down there is stabalising, as opposed to showing accelerating decline as many have been expecting....especially given higher proportional volumes of sales of lower priced house sales compared to "normal". Units held up a bit better with a 5.2% y/y decline and a 1.1% Sep08->Dec08 decline.

Cheers,

Beej

 

[robots]

hello,

yeah what a mess Beej, down 10% for the year,

what a bunch of hypocrites, the REIV is the source now, fantastic

looks like the thread title is genuine Number, see sig

thankyou
robots

 

[singlefished]

Most of that fall is "old news" - actual REIV release is here: http://www.reiv.com.au/news/details.asp?NewsID=736

Records a 0.9% median price fall from Sep08 -> Dec08 quarter ($430k -> $426k). Looks more like the market down there is stabalising, as opposed to showing accelerating decline as many have been expecting....especially given higher proportional volumes of sales of lower priced house sales compared to "normal". Units held up a bit better with a 5.2% y/y decline and a 1.1% Sep08->Dec08 decline.

Cheers,

Beej

Looks to me more like its going to get a fair bit worse... these "drops across the board" were last year when the recession wasn't such a looming issue.

With the propsect of higher unemployment and the ongoing financial issues during a recession scenario, I fully expect prices to continue dropping instead of this stabilising picture you're trying to paint.

As to how fast these assets will drop I cannot comment, nobody really knows how deep and severe the recession will ultimately be.

 

[dirty_harry]

You guys need to be careful when assuming interest rates will be low if there is a huge downturn. Australian banks get about half (more or less) of their capital from depositors but need to raise the other half from offshore bond markets on an ongoing basis. This is why there has been a slight disconnect between the official reductions and mortage rate reductions, and why the non bank lenders have been wiped out. So far it's not such a big disconnect and the govt guarantees have helped. But certain forecasters are saying the bond market in the US is the last big bubble, so it's possible to have a nightmare scenario of stagflation with recession, inflation and high interest rates. Rental yields around the world like central Europe where the wasn't really a bubble are usually around 8% long term. I would say if you can get around that in an average suburb in a large Australian city then that would be a reasonable long term investment. It was there in '95, '96 so I'd say wait for now, and don't live in denial.