House prices to keep rising for years

[nomore4s]

So Rudd has been successful extending the AU housing bubble in some sectors while the rest of the world is in recession, doesn't that ring alarm bells in anyone else ?

It certainly does and I have stated as much in previous posts. If we do get a large spike in unemployment there could be problems in the future imo.

On a personal note if house prices don't collapse and the recession for Aust isn't deep it will be better for me due to our business making more money but I'm still to be convinced it is sustainable but i have been known to be wrong before.

 

[kincella]

I missed this one on Sat 7th....
just more good news for the positive ones here

FIRST home buyers are being being forced to buy a record distance from the city as low interest rates and higher first homeowner grants push up prices in once affordable suburbs.

Only 316 of Melbourne's 2720 suburbs and towns have a median price below the average first home buyer's budget of $277,000, new figures released by home seeker website Our Home Sweet Home.

"Interest in properties in the $250,000 to $350,000 bracket is intense, with demand often outstripping supply, fuelling bidding wars in some areas," said the firm's chief executive, Peter Boehm.


--------------------------------------------------------------------------------
Full list: Melbourne's affordable suburbs
http://www.news.com.au/heraldsun/files/affordablesuburbs.pdf


http://www.news.com.au/heraldsun/story/0,21985,25149517-2862,00.html

 

[ned_beaty]

What the bulls here fail to recognise is that the only way property can keep going up is if there are continually new buyers available to bid up the prices. Since Australia has very low savings this money has to come from borrowing and it looks to me there aren't too many people left to go further into debt to out bid the next guy for a property.

How can this trend continue when the government has to give away $14000 to convince people to go into debt to get into the market??

Where are the buyers going to come from once the FHB are tapped out and can't borrow any more??

These are the questions you should be asking yourselves.

The FHB increase looks to me to be the last acts of some desperate men hoping that we would just scrape through without going into recession. It isn't sustainable and property price increases are totally supported by increasing debt levels, which is also unsustainable.

 

[Beej]

Hardly blinkered... what you're missing is the fact that volumes are significantly lower year-on-year yet you keep on citing clearance rates like this is the be-all-end-all and everybody else is wrong. Pulling up the occasional example of a property that does well at auction to demonstrate your point, well, that just means your summarising the market by the results of a single property.... Everybody knows that not all properties are suited to auction and the properties that are and have something special to offer will return a good price regardless of market sentiment.

Auction results are an extremely relevant indicator of what is going on in the market - there are other indicators as well but ignore auction results at your peril if you are truly trying to gauge the market. Last year we had falling sales volumes, falling prices and falling auction clearance rates. So far this year we have stabalising sales volumes, stable and in many cases rising prices (especially lower/mid price brackets) and rising auction clearance rates. Blind Freddy can see that it is indicating something is changing, and those indicators are historically quite bullish.

Way back in this thread somewhere I pointed out that what often happens in soft markets is vendors tend to pull their head's in - ie, they see the market is bad and so put off plans to sell/upgrade etc until "things get better". So there ends being less property for sale than in boom times. This offsets reduced buyer activity and effectively sets a floor under potential price falls. Now, forced selling in large volumes obviously could counter that and break that floor (which is what happened in the US) - conversely, a pick up in buyer activity can have the opposite effect as the reduced micro-level supply means increased buyer competition = upwards price pressure.

So let's look at where we are at - is there increased forced selling currently (in Sydney/Melbourne)? Check the default rates/mortgagee sales stats etc and the answer is no. There was probably some high end forced selling last year due to corporate collapses + share market crash (margin calls etc), but in regular price ranges default rates have been falling as interest rates have come down.

Now, is there increased buyer activity (in Sydney/Melbourne)?? The answer is clearly yes. It is now undeniable that the FHB grant boost, plus the low interest rates, plus probably the sentiment that prices have been flat to falling for some time now (especially in western Sydney), have resulted in large numbers of FHBs who have been sitting on the sidelines coming into the market with gusto. The bears on this thread tried to deny this was happening for months at the end of last year - even as posters like myself and others pointed out the early indicators, including weekly auction results etc, our own experiences etc, that were showing this was starting to occur.

And now IMO the early indicators are showing that not only is the FHB activity continuing, the impact of that is flowing through the rest of the market. Higher priced properties are starting to sell, prices are rising in the low end and many mid range suburbs, as indicated by the rising median price in the weekly auction results.

As a result of this I will forecast here that for Sydney at least the median house price will rise in Q1 2009.

Anyone else - including bears, please feel free to provide your forecast for Q1 09 for any city/region or nationally, if you think the data is telling a different story - let's put it on record and see who end's up being right?

Also, that Bondi place..... Niiiiice "what is arguably one of the worlds most spectacular viewpoints"

Can't believe you have the balls to use this property in particular to your arguement.... 'nuff said

Yes great view - but also big money for an apartment in Bondi, so I think it is a good example showing that there is serious money out there chasing the quality property again. Last year that unit would have struggled to get ANY offer.

You already know that the property market is in decline and the economy, well...... yet you're keen to advocate that now is a great time to buy and get into the market.

Yes, I agree that in the long term, property is always going to be a good investment, but timing is key to maximising your returns especially in a market that moves as slowly as property. And again, no I don't think we're going to see 40% as some people like to cite.

I think it is highly irresponsible to be advertising "now is the time" when many of these young FHB's or existing homeowners could be unemployed this time next year.

I'm not saying "now is the time", what I am saying is that "now might be the time, depending on individual circumstances". Nothing is certain, but if I was say an Ambo, teacher, or copper for example, (I'm thinking of a cousin of mine for this example - couple, 2 kids, one cop one ambo), and I had been wanting to buy my first home for some years, then now probably is a very good time! What is the downside risk for them? They have very secure jobs, affordability is relatively high, rents are rising etc etc - really what have they got to lose? I've got a spreadsheet that shows that even if prices fell further from here (which in lower/mid price ranges in Sydney I don't believe they will), after 5/10 years this example couple would still be miles ahead as compared to continuing to rent. Plus they might WANT to own their own house for the stability/family life etc.

So it's not irresponsible at all to suggest the above IMO. What is irresponsible is to discourage people like the above from buying with alarmist and overly negative predictions of never ending doom and gloom, which may well turn out to be completely wrong (aka Prof Keen etc).

"Perhaps Lieing was a poor choice of words so apologies for that, but comments like "...I'd almost think we were in a booming R/E market" (of recent posting) and "Sydney has already had it's bust and prices have been flat since 2004 and unlikely to drop by substantial amounts" (from pages and pages back somewhere in here) are completely false statements and are stated with the intent of achieving what end? You tell me...

There is no factual evidence that we have reached the end of the downturn and have currently entered a boom phase, but there's plenty of fact stating that we are still sliding down hill and no end is in sight..."""

Apology accepted re the lying accusation by the way - however I think Kincella defended my position and statements that you quoted there quite well already. To add to that, many of us are posting a stream of facts and data the support those assertions quite well. Sydney property DID peak in 2004 - that is a fact, not a falsehood. Then my statement "I'd almost think we were in a booming R/E market" was made in the context of looking at the auction results of the past 6 weeks and noting all the bullish indicators they were showing, then posing that question as a challenge - hardly a falsehood, just a statement of opinion and a challenge.

And as for your assertion that "we are still sliding down hill and no end is in sight" - please provide some facts and evidence that show this is the case for the Sydney property market? Everything i am seeing is (maybe even surprisingly given the economic situation) indicating the opposite. But the property market can be very surprising and very resilient at times.

Cheers,

Beej

 

[aleckara]

Beej I have to agree with you on this. The property market is showing some signs of strength in Sydney, particularly Western Sydney. A lot of sales are occuring in areas like Blacktown, Liverpool, Penrith, etc to FHB's. Most of the bargains that were on the market in these areas (and I have been looking) are being snapped up very quickly. And I suspect that the dynamics and culture of these areas will be changing in the coming years - a lot of these new starters will be people who probably lived closer to the city before but can not afford to buy there in this day and age.

And if house prices come crashing down I'm sure that for most people it won't make it more affordable - a lot of people will be out of the job. As long as their is a shortage the prices will be high relative to average income - although it might be lower. It will be like Japan, public sector jobs considered the only good ones.

 

[kotim]

Of course your going to see some rises, gov’t is splashing about money, very low interest rates, all sounds wonderful. Still relatively low unemployment. Huge gov’t stimulus packages, all sounds wonderful but hides the truth.

House prices in general whilst they have fallen a little are still extremely high by historical standards, meaning you need dual incomes to pay the loan, especially for the younger generations.

So if unemployment goes to 8-10%, then there are going to be many hundreds of thousands of people who are going to lose their jobs, whether they be full time or part-time. So those people in loans who lose their jobs which needed dual incomes to support it, are going to have to put their properties on the market, one way or the other. Lets add to that the many casual and part time workers who will have their hours reduced.

Most people will borrow to the hilt and all time low interest rates and here is the paradox. If the stimulus packages work as they are supposed to, then inflation is going to be a problem, which means increases in interest rates. Mmmmm, borrow money at 5% and interest rates go to, say, 7.5% and you have a 50 increase in repayments, that hurts a lot when your property is worth less than when you bought it, as is definitely the case, going to be for most of Australia.

We know the vast majority do not fix loans until it is too late. If the stimulus package does not work and inflation is not a problem then also house prices will not increase.

There is no housing supply shortage, when times turn bad like they have, people share more, There are many thousands, of units especially, out there that can’t be sold because the developers don’t want to drop the prices etc.

Simple fact. We have had the biggest property boom for decades, which means we have to have the biggest property fall in decades, never been any different in history any where in the world, the bigger the boom the bigger the bust.

 

[kincella]

kotim.....time will tell..who is right and who got it wrong....lets review this in a years time.....
all I can say is...there is very little faith in the community out there...or confidence
but lots of scaredy cats....and wobbly crystal balls....and pigs that fly

 

[Uncle Festivus]

kotim.....time will tell..who is right and who got it wrong....lets review this in a years time.....
all I can say is...there is very little faith in the community out there...or confidence
but lots of scaredy cats....and wobbly crystal balls....and pigs that fly

....and pigs that fly.......the thread title says it all......

Can you tell me this, being a property investor with several properties subsidised by taxpayers, will you be getting the $900 Tax Bonus Payment?

 

[robots]

hello,

its been fantastic Kincella the discussion over the past 3yrs+, yes that long and not much has changed really

some suburbs go up some suburbs go down one year and then things change the next,

is the internet still working in the UK?

thankyou
robots

 

[satanoperca]

Robots,

Fantastic news rents are up 15%. But wait, lets look a bit closer

The following stats from the REIV website :

ST KILDA MEDIAN PROPERTY DATA Annual Change
St Kilda House -3.8%
St Kilda Unit -8.2%

So lets do some sums on apartments :

Median Price Dec 08 - Dec 07 = $383,250 - $417,500 = - $34,250 Decrease

Rent in 07 say $400pw/ $20,800 *15% increase = $3,120. Fantatic news for you, you have recieved $3120 more in rental return while losing $34K in capital, you are the man to help Krudd out of this mess.

Paradise everywhere you look, with one eye open, pity you are often sitting on it.

Still up for the wager.

 

[robots]

hello,

yes, still up for it

no thats not right its a "median" so its not accurate (a traditional gloomhead excuse)

wont run away like other posters who have come and gone

thankyou
robots

 

[kincella]

robots...
.were you at the Moomba festival today...
I have been on other sites for the past 8 years...same old stuff....I say its a good idea...they say not....but unfortunately for them I have made a stack of money....and there is more where that came from...I am afraid....

and some of them still have the same story as 8 years earlier....no change in attitude
but since I am semi retired now...have even more time to sit here blogging away with the same old story....hopefully some will listen

well is it 8, 12, 0r 16 billion the first home buyers have spent in the last couple of months......thats a lot of fhb's....obviously they dont blog on here

the other poster....of course I will get some money back...I paid tax....its probably...nah never mind
taxpayer funded...well yes....but they have not been building and providing public housing since about the 70's....if it were not for IP owners like self...the rental situation would be even worse....plus our props are usually nicer than 5000 people crammed into little ugly boxes....

cheers and have a nice day

 

[kincella]

forgot to mention.....prices triple every ten years....so lets see ,,,4 resi props at say 300,000 each = 1,200.000 x 3 times = 3,600,000
or an extra 2,400,000....thats right 2.4 million extra.....and lock in some rate cuts......means even more cash to spend each year....
dont like the big tax bill though.....will have to straddle the sales, or hope there is no CGT.....
we self funded retirees need all the help we can muster.....
think I need to have a little chat with Peter Costello
cheers

 

[IFocus]

kotim.....time will tell..who is right and who got it wrong....lets review this in a years time.....
all I can say is...there is very little faith in the community out there...or confidence
but lots of scaredy cats....and wobbly crystal balls....and pigs that fly

I must say that I didn't expect the RBA's and Treasury efforts to work as well as they have to support housing prices.

But the early signals were they would support the banks at all costs after watching the US and EU fiasco's and holding housing up is imperative to maintaining capitalization levels for the banks.

All this buys time for a slide as apposed to falling off a cliff but reading the comments here it appears to have also given some false confidence IMHO.

The big question is what happens after FHB's remember this is a false floor all be it a very effective one but it cannot go on forever.

As a trader I know all markets are inter connected in some way or as you might say asset classes. Sovereign default of some of the Eastern European countries is the current risk and its very real if that dose blow up then we see EU banks blow up along with the EU economy.

Whats this got to do with Oz housing......plenty

 

[robots]

hello,

people please remember:

the FHG has been going since the GST was introduced, in 2001

on the 1st July 2009 the following will happen:

buying existing homes, will go from 14k back to 7k

building new home, will go from 21k back to 14k

wow, what a ponzi scheme

kincella, went to birdman rally yesterday always a great time

is the internet still going in the UK?

thankyou
robots

 

[Go Nuke]

Ah everyone knows it takes 2 incomes to pay a morgage these days....so hpefully with rising unemployment people will be forced to sell, thereby increasing the pool of houses for sale and bringing down prices.

At least thats what Im hopeing for.

Although I see the rest of the country is also saving every penny at the moment, so once this turmoil is over investors will return.

Shortage of housing is still keeping property prices up though unfortunately.

And my -1% wage rise for 2008 wont help me much.

Down down down..thats wher I want everything to go...other than my shares:>

 

[singlefished]

Auction results are .............. historically quite bullish.

We've gone from low numbers of sales at auction to better sales results at auction but with lower amount of properties being auctioned. Good, vendors are starting to see the folly of an expensive failed auction campaign especially when theres no guaranteed result. Nothing I can find about falling inventories on the open market however, in any state or territory..... plenty of reasonably priced property up here (brissy) which would have been snapped up in times gone by sitting on the market going nowhere.

So let's look at......................... have come down.

Not sure if there is forced selling but there is certainly what I would dub "forced buying..." Interest rates never been so low, so much stock on the market, unprecedented doubling of FHB grants, got to get in whilst the going is good... certainly the lower end of the market is moving but even at the worst of times it's not the lower end that cops the massive capital losses. Don't be too surprised will you when this blip of "frenzied activity" gradually dissipates over the coming months as the contracting of the economy starts to bite.

Yes great view - but also big money for an apartment in Bondi, so I think it is a good example showing that there is serious money out there chasing the quality property again. Last year that unit would have struggled to get ANY offer.

maybe serious money but it could just as likely be inconsequential small change for some high flyers weekend getaway.... certainly not a leading indicator.

I'm not saying "now is the time", what .............use for the stability/family life etc.

Yes, all good reasons to purchase and I have no issues with people purchasing property at any time assuming they have considered the bigger picture and their own financial position and objectives. Downside risk: the other residents of their suburb (in general) won't have the security of a public services position could suddenly find themselves unemployed, reposession and forced selling of their etc, etc

So it's not irresponsible at all to suggest the above IMO. What is irresponsible is to discourage people like the above from buying with alarmist and overly negative predictions of never ending doom and gloom, which may well turn out to be completely wrong (aka Prof Keen etc).

You like to bag this guy Keen don't you?

Saying that though, he's been more accurate with his predictions than any of your "respected economists" even if his predicted falls are a tad extreme!

And i'm pretty sure he didn't have much to do with the economy contracting for the first time in 8 years and likely to progress to technical recession when the data comes out next quarter. What I would consider alarming was the fact the "respected economists" were all predicting at least 0.2% growth only seconds before the data was released.

In summary, what I'm saying is it should be irresponsible to provide advice without outlining the downside risks.

.....Kincella defended my position and statements that you quoted there quite well already.....

must have missed that, morse code was never one of my stronger subjects.

And as for your assertion that "we are still sliding down hill and no end is in sight"

Sorry, I was referring to the state of the economy and the impacts the external influences will subsequently have. The downside risks underpin my less than bullish sentiment in the short term and it would be folly for anybody to turn a blind eye to this when considering the immediate future of property.

 

[billv]

forgot to mention.....prices triple every ten years.
cheers

Really???
where are your IP's in SE QLD?
Remember that what goes up a lot can correct a lot as well.
Mine only double every 10 years which is only a couple of % above inflation.
Nothing to brag about but at least it's consistent long term growth.

 

[billv]

Can you tell me this, being a property investor with several properties subsidised by taxpayers, will you be getting the $900 Tax Bonus Payment?

Actually I am a property investor with several properties and I can tell you that the only tax break we get is reduction of OUR taxes.
No taxpayer money is handed over to us but it is handed over to first home buyers.
Meanwhile we investors provide housing for people to live in.
If we didn't buy those properties then developers wouldn't build new ones and you wouldn't have anywhere to live.
Whether we like it or not this is how the system works in this country.

Are we going to get the $900 tax bonus payment?
Yes if our taxable income falls within the specified range and before you say anything else it's OUR taxes we will be getting back.
If we pay no tax we get nothing back.

 

[kincella]

Billv....my props are in regional area...Nsw/vic border.... I bought first home 12,000 in 1970 sold for 80,000 in 1989.... 660% increase over 19 years...friend paid 12,000 house inner city armadale vic same time, now the land alone is worth 800,000
then this chart australia wide 20 years to 2006...median price established home in 1986 was 80,000 in 2006 400,00 so thats 5 times in 20 years....
I bought a prop in 2000 for 115k, 8 years later its worth 300k, in the current depressed market

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf