House prices to keep rising for years

[MrBurns]

this deflation thing is fantastic I picked up 3 slices of pizza for $5 instead of 2 slices today at the Sth Melb market, paradise
thankyou
robots

Now there's a leading ecomomc indicator

 

[MrBurns]

live in the home for a continuous period of at least 6 months, commencing within 12 months after completion or settlement.

So let me get this straight, you could buy a place for your child, let them live in in it for the first 6 months then let it out ?

How would they find out if you didnt comply and just let the place out ?

 

[numbercruncher]

If you are going to quote me at least quote me properly NC..... I said "but there WILL NOT be price falls of 40-50%" not "but there WILL NOT be price falls".

Hello ...

Nice day to go fishing .....


So you agree there will be price falls ?

 

[knocker]

um all of your latest posts seem to be attacking robots , in the "people revolt"thread you reckond robots and beej made you ill

like i said darl . why the obsession ?? is it a poster name thing or is it there opinions you cant deal with hence your constant attacking of the poster

p.s no i am not on anything as you asked , i was genuinely concerned for your mental wellbeing

Ok well how about I knock you for posting absolute drivel?

 

[nunthewiser]

Ok well how about I knock you for posting absolute drivel?

"knock" me ??? uh ?? whats that mean darl?

 

[lusk]

So let me get this straight, you could buy a place for your child, let them live in in it for the first 6 months then let it out ?

How would they find out if you didnt comply and just let the place out ?

Had a mate busted that tried to do the dodgy. He even let the place sit for 6 months but they looked at the services and he didn't have bills for electricty or gas in his name and had to pay the FHB grant back.

 

[MrBurns]

Had a mate busted that tried to do the dodgy. He even let the place sit for 6 months but they looked at the services and he didn't have bills for electricty or gas in his name and had to pay the FHB grant back.

Ok thanx for that.

 

[knocker]

Had a mate busted that tried to do the dodgy. He even let the place sit for 6 months but they looked at the services and he didn't have bills for electricty or gas in his name and had to pay the FHB grant back.

I guess you could get some people to house sit... keep the bills in your name and adjust the rent accordingly. In the Uk they have prepaid cards for electricty... do they have them here for utilities?

 

[MrBurns]

I guess you could get some people to house sit... keep the bills in your name and adjust the rent accordingly. In the Uk they have prepaid cards for electricty... do they have them here for utilities?

I'm sure you could get round it if you wanted to, you just have to be aware that they ARE checking and you wont be able to get any rent return for the first 6 months so that takes what ? say $7k or $8K off the benefit you get from the grants.

 

[Bill M]

On Friday I got an alert from realestate.com about a new property on the market. It was very cheap for my area, 239K for a 35 year old tiny 1 bedroom flat in a beach side Sydney suburb. I said to my wife let's take a look. On arrival there would have been a least 12 people waiting to inspect this unit. During the 5 minute inspection another 5 people arrived.

I asked the agent how much rent the unit was getting. It was leased for $220 per week but he said it was light and $250 p/w was more in line with current rentals. The place only had a open air car space, share laundry, no balcony and needed new carpet and kitchen. It wouldn't have been more than 35 square meters.

This is the type of demand we have here, this unit without doubt will be sold by the end of the week. My wife and I backed off because I'm **** scared of getting into debt again, this could work against me I don't know. I can't speak for the rest of Australia but in my area there no let up in demand.

 

[So_Cynical]

My mums house has been on the market for about 4 weeks (60 meters from the ocean, big country town south of Perth)....no inquires no lookers, nothing, no interest at all....she hasn't dropped the price.....yet.

 

[numbercruncher]

My mums house has been on the market for about 4 weeks (60 meters from the ocean, big country town south of Perth)....no inquires no lookers, nothing, no interest at all....she hasn't dropped the price.....yet.

We are so oversupplied with realestate and with the economy diving and guest workers fleeing its set to slide much further into the abyss ....

 

[roofa]

This is the type of demand we have here, this unit without doubt will be sold by the end of the week. I can't speak for the rest of Australia but in my area there no let up in demand.

Got any house examples Bill?
The FHB grant is holding up the bottom end of the market very well, currently.

 

[wayneL]

For now price falls are done in Sydney at least - I don't think we will see a return to boom times anytime soon, but there WILL NOT be price falls of 40-50% like the dreamer above seems to think

The thing is Beej, we don't know yet how far this recession is going. Standing in the street and looking around, it would seem highly unlikely that 40-50% falls are likely... particularly in nominal terms.

But there are still poisons in the mud, just waiting to hatch out and waist more capital. In the 30's depression, housing (which was similarly overvalued) actually fell a looooong way... over 50%.

I'm not saying this is a great depression II yet, but it's possible and it is "possible" that some housing does fall 40-50% over the next few years, Nobody can say prices "WILL NOT" fall by x amount, because we don't know what's over the horizon.

I think any business person not playing ostrich, should be running a few if/then scenarios. What if housing falls 20 - 30 - 40 - 50% from here? Very few people would have believed $40 oil and $1.40 copper in 2009, but there the prices are, just staring us in the face.

These are "interesting times" and I'm betting that they will get one hell of a lot more "interesting" than any of us would really like.

I have a very small IP pf, only 2 houses that I never intended selling and they are close to being paid off. With the benefit of hindsite, I'm wishing I did flog them a year ago.

I've annoyingly bearish on this site for years, perhaps this site's biggest bear, but now it's happened, it's actually far worse than even I had imagined and the game is still only in the first chukka.

 

[MrBurns]

I have a very small IP pf, only 2 houses that I never intended selling and they are close to being paid off. With the benefit of hindsite, I'm wishing I did flog them a year ago.
.

Dont sell, even if you'd sold a year ago it's not easy to get back in, then there's stamp duty and all the BS. Prices will take years to really drop, so if the rent pays the motrtgages keep them, I guarantee that in years to come you'll be glad.

BUT If there is doubt over the ability to sevice the debt, get out now there's still time as it will get a lot worse in the next year or two.

 

[wayneL]

Dont sell, even if you'd sold a year ago it's not easy to get back in, then there's stamp duty and all the BS. Prices will take years to really drop, so if the rent pays the motrtgages keep them, I guarantee that in years to come you'll be glad.

Agree, just lamenting the paper loss... the 2007 "value" I always considered illusory anyway.

 

[kotim]

There is not an excess of people relative to houseing, gnererally speaking, how many times have people got to be told before they think properly about it. Sure in the very best areas there will always be a "shortage" because of the high desireability, however in the scheme of things there are very few of these places relatively.

When we were in the boom and people were investing in property it was the average mum and dad who were buying 2nd third and fourth properties, let alone the property devleopers etc etc.

Now who was moving into these places that people were having built for their investments. Well besides foreigners coming into this country, it comes down to relocation and then mainly people who were normally sharing places, living with parents etc etc.

Now we simply go back to less people relocating and more to the point more people going back to a sharing arrangments whether it be with family or friends.

It is as simple as that.

I will give you an example, I bought a house in Townsville in the early 90's part way through the boom, house prices were going up and rent was going up, and then the boom stopped around 1993 give or take. I was getting $210.00 dollars a week back in 1992 for the house which I had paid 113 grand and 15 months later was worth 150 grand.

Anyway by 2002 My 210 dollar a week rent had fallen to 175 a week.

The saem scenario wil happen again, it all comes down to degrees.

When the current young generation that never experienced 1987 and before get over what is happening now they will understand the consequences of excess.

If anyone is willing to do the investigation you will find that many an analyst are stating that there are many trillions of dollars of credit that still have to be unwound around the world, with so far only a measly 1 trillion or so. Until just about all of that credit is unwound, you cannot have real good growth again.

Some areas of property without doubt are gong to see falls of 50 or greater adn some areas will only see 5-10%. I personally all ready know of places that have fallen 30% and they have a lot more to fall.

It all comes down to perspective and about what decisions were made when investing int he first place, those who made the better decisions will be less affected and those who made the worst decisions will pay a far greater price.

 

[kincella]

oh dear...the kids got another freebie today...2500 towards the insulation..so with interest rate drops of 1% on the average 250,000 loan thats another 2500...so 5000 in one day.....
now they can afford to spend another $$$$$$ on that house.....
plus another 2500 in rate cuts next month..

 

[Bill M]

Got any house examples Bill?
The FHB grant is holding up the bottom end of the market very well, currently.

House prices aren't quite so hot. My friend had a full duplex (upstairs home and the downstairs home) for sale and didn't get many people coming through. It was on the market for 1.2M. I've been going to open for inspections for 2 Months now and anything between 300K and 400K is sold within 2 weeks. Most of the buyers were investors, people in the over 50's group, not many FHB's.

The majority of investors just want to buy something in this price bracket, rent it out and get regular income. Cash getting 3 and 4% is not much chop for self funded retirees and with sharemarkets imploding I can understand why they want the security of real estate. Beachside suburbs that are walking distance to beaches, clubs, supermarkets and transport will always be in demand, cheers.

 

[sinner]

So far, those who claim property prices will coninue upwards have done little to address several key factors:

1. Cheap credit obtained on the international wholesale debt markets by Aussie banks is GONE. This was the fuel for the property boom. Now the fuel is gone, how will Aussie banks be able to fund so much lending?
2. Australian household debt is 177% of GDP and this ratio is climbing fast as Australian manufacturing index declines for the 8th straight month. This is almost a world record level of debt:GDP ratio, and is simply unsustainable. Take a look at Japan for this week to get an idea of what happens when you go crazy on debt:GDP.
3. Another debt ratio closely related to point 1, net foreign liabilities (the majority of our net foreign liabilities are in real estate) is standing at roughly 60% of GDP (and rocketing upwards). As a country, we will have to generate 4% of GDP to continue our liabilities, twice the current required payment of the US.
4. No real productivity growth in 10 years of boom time.
5. Official Australian jobless figures at a 2 year high, 4.5%. Does anyone think unemployment is going down from here? The manufacturing index continues to decline, and manufacturing accounts for 10% of GDP and a full one tenth of our workforce. Can you imagine what the real estate sector will look like if manufacturing declines by half? These won't be the low end homes like kincella mentions or the high end homes in high end suburbs. These will be blue collar defaults.
6. Government spending continues to ratchet up far beyond the scope of any possible budget deficit. The latest package of $42bn will push us deep into the budget red and impede any further assistance from the Government for property speculators. We should expect no long term help from our shrinking trade surplus.
7. Future growth depends wholly on employment and cheap credit. Any supply side issues have now been taken out of the picture by the short sighted policies of the current government, who obviously did not learn from the US that stimulating construction and providing cheap credit can only lead to trouble in the long run (no matter how AAA-good things look in the short term).