House prices to keep rising for years

[kincella]

I posted this on another forum....
I mentioned this would be the case, in all probability, way back in July of last year, then confirmed it in Oct/Nov...
when everyone was calling a price crash coming... I suggested the middle to higher price bracket owners...would take their houses off the market....
hence the very low numbers of sales.....some cases only 25% of the usual number are available, with high clearance rates
its not as if there are 1200 up for auction..there are only 300 up for auction
only difference in the burbs I watch, is that the more expensive homes are now selling,,,slowly...but the middle market has dissapeared....there's none for sale, and nothing much left in the fhb range

the next wave will be when jobs are considered safe...then the middle market will come to life as owners upgrade

http://www.news.com.au/business/money/story/0,28323,25191709-5013951,00.html

 

[Junior]

Hang on...so are you saying the recession is almost over and the unemployment rate has peaked? I think you're getting a little bit ahead of yourself at the moment.

 

[nunthewiser]

love this thread

sunshine and lollipops

 

[kincella]

junior...never said anything like that at all.....I said....I dont believe there is a price crash coming

it will take a year at least before things settle down...unemployment to rise, and probably been in, or heading for a recession here , in my view, for about 18 months
while interest rates were rising every month....and those in charge just kept on flogging us all....had to stop spending...paying it all monthly in rate rises
I stopped spending 18 months ago.....buckle down and protect ones self....

 

[MR.]

I had my auction today, not one bid. Amazing. An inner city townhouse priced between 450K and 500K and not one bid.

God help me when property does collapse.

Maybe they all read your latest posts on here and decided to wait because you convinced them prices are going to crash???

Seriously though - any pre-auction offers? Regardless if there are interested people you may still get offers through in the next week - FHBs in particular often don't like to buy at auction because of the unconditional contract (in NSW anyway).

Yes, that's what happened. No pre-auction offers but 5 FHB's who were dead keen and turned up but all froze on the day(probably because it was bucketing down with rain!).

Agent is confident of selling over the next 2 weeks.

Perhaps the FHB's read how you were going to dump it on their heads!

Now the agent thinks it will sell in the next two weeks. Many do and the agent's contract is also approaching expirey. Sign him/her up to extend the time he/she has to sell now, even one extra month. Otherwise don't be surprised when your agent starts to apply some pressure for you to drop your price. At least if you end up accepting a lower price, which will be the case, you can eliminate in part that the agent was running out of time.

 

[vincent191]

There is a shortage of "average" housing in Sydney. By avearge I mean the ordinary "bread & butter" housing not the top end market catering for the exclusive few.

I have been looking for an inner city "average" 2BR apartment at a reasonable price (high $400K) and they are as rare as hens' teeth. Even in the low $500k region there are very few available.

Even around the $700k region (which is out of my range)there ain't too many around.

 

[kincella]

I don't know....almost 14 billion...spent on owner occupier finance in January alone...and commercial finance rose 6.5% to 31 billion

thats a large amount of money being spread around on property...seems very different to the media hype for the past year

http://www.news.com.au/business/story/0,27753,25192851-31037,00.html

 

[Beej]

Kincella - yes very interesting stats.

Here's a very interesting arcticle by Michael Pascoe of the SMH:

http://business.smh.com.au/business/safe-as-average-houses-20090316-8zhk.html?page=2

Safe as (average) houses

It's a reckless soul who gets carried away with any single month's statistics, but there's another speck of light in the housing industry tunnel with today's lending finance figures and - more importantly for our banks - the price performance of the average Australian home.

With the domestic and global economies deteriorating so quickly, January statistics are somewhat ancient history, but for what they're worth, the number of people borrowing to buy a home rose 2.5% in trend terms from December to January. That's a monthly rate that would make for very happy banking and residential real estate industries if it was sustained.

And here is a great quote from Rory Roberston of Macquarie, which is worth consideration by all those bears that think unemployment is now going to be the trigger for the great aussie house price crash, seeing as all the previous predicted triggers (we follow the US *bzzz*, severe local credit rationing *bzzz*, rising mortagee sales *bzzz*, absence of FHBs *bzzzz* etc etc) do not seem to have worked:

''Between June 1990 and June 1992, full-time employment fell by 7%, and then took a full three years to get back to where it started. So, how far did home prices fall? Actually, they didn't. Average house prices across Australia's state capitals rose - not fell- by about 2% per annum in nominal terms as that early-1990s recession and jobs disaster unfolded.

''It turns out that the downward pressure on home prices from shrinking employment in the early-1990s recession was more than offset by upward pressure on home prices from the halving of mortgage rates, from a record 17% in 1989 to 8.75% in 2003"

.....

''Most Australian households who are 'deleveraging' are doing so in a painless fashion, simply keeping their monthly mortgage repayments unchanged despite the 40% reduction in their interest bill since August.''

To help keep a little perspective on the average Australian home, it's worth remembering that more than 60% of households are mortgage free - even unemployment can't see a bank repossessing them."

Perhaps I should be posting this in the "house prices to fall" thread, as really this article primarily debunks the ongoing notion many people hold that house prices here are destined to fall for years. However, given that even if you just think house prices won't fall much for a while, and that some segments will actually show modest growth and will probably increase again quite strongly in a few years time, you are labeled a "perma-bull", it's better to post this stuff over here I think

Cheers,

Beej

 

[Mc Gusto]

Is obviously a tricky one to predict either way. What I can tell you is this: I am in the mid 700's range for a house. My partner and I have been looking for around 9 months. From this personal market research I have come to the following conclusions:
1. The house market has come down (in the range i mentioned) anyone who tells you different is wrong (apart from the below 500k range)
2. There is far less volume of houses available - true test of the market is when and if volume increases over the next 12 - 18 months
3. Money is cheaper so I am now looking at a better house in a better location at a cheaper price and lower repayment for my 750k
4. I am happy as a buyer.

Thanks

Gusto

 

[kincella]

beej,
of course its holding up, and I have no worries about the 500-600 market and below....just believe you can get a very nice house in that range....no need to go over the top...as it stands, those median price houses will be over 1 mill one day in the future...but its not like you are paying interest on that amount
if you have experienced it you should have learnt from it (you and I know thats the lesson we all have to learn sometimes)...on any subject...so in my case its been there and done that....of course its nothing like what all the scaredy cats were screaming about....

I expect some softness in the above 1 mill bracket..but I still believe the next wave will be the upgraders, who will move into the market and snap up any bargains
its just good to see our predictions are now confirmed...
cheers

 

[gfresh]

And meanwhile, in QLD, agents beg for the FHOG to be extended..

A tale of two cities me-thinks.

 

[IFocus]

Kincella - yes very interesting stats.

Here's a very interesting arcticle by Michael Pascoe of the SMH:

http://business.smh.com.au/business/safe-as-average-houses-20090316-8zhk.html?page=2



And here is a great quote from Rory Roberston of Macquarie, which is worth consideration by all those bears that think unemployment is now going to be the trigger for the great aussie house price crash, seeing as all the previous predicted triggers (we follow the US *bzzz*, severe local credit rationing *bzzz*, rising mortagee sales *bzzz*, absence of FHBs *bzzzz* etc etc) do not seem to have worked:



Perhaps I should be posting this in the "house prices to fall" thread, as really this article primarily debunks the ongoing notion many people hold that house prices here are destined to fall for years. However, given that even if you just think house prices won't fall much for a while, and that some segments will actually show modest growth and will probably increase again quite strongly in a few years time, you are labeled a "perma-bull", it's better to post this stuff over here I think

Cheers,

Beej

Saw that article and it had some excellent valid points for the up side but the time frames are very different, interest rates cut 850 basis points over 4 years vers 400 over is it one year yet.

 

[Uncle Festivus]

I don't know....almost 14 billion...spent on owner occupier finance in January alone...and commercial finance rose 6.5% to 31 billion

thats a large amount of money being spread around on property...seems very different to the media hype for the past year

http://www.news.com.au/business/story/0,27753,25192851-31037,00.html

Is there any way we can put that into perspective ie what was the effect on house prices during the same period. Did it translate into real gains (after inflation etc) or did it only manage to hold/lose ground? If so, in the face of the stimulii, is this the ongoing 'commitment' of state & Federal government's in perpetuity then until inflation and unafordability set the agenda, again? A homegrown negative spiral into pricing out another generation of aspiring home owners?

PS speaking of immigration, the bobble heads have finally started to see the light - cutting immigration by a token amount - the first sure sign that we are definitely in a recession?

 

[Dowdy]

Well dowdy that all depends on your goals, if you Believe you will be stilling paying off your house in 10-15years time I'm 99% confident you still will be.
Unless your belief changes offcourse.

On the other hand if you think you will be paying off your 3rd-5th house in 10 to 15years time I Certain you would of paid atleast 1 maybe 2 off by that time.

This is not THE SECRET where if you believe it will come true.

I'm talking about paying it off 100%.

Most of the speculators out there who have 3-5 houses don't own them. All they have is 3-5 loans that need to be paid off. That's not real wealth

 

[knocker]

OH no this can not be happening
http://www.theage.com.au/national/mortgage-belt-jobs-in-peril-20090316-9023.html

 

[enigmatic]

Dowdy i was also talking about paying the houses off in that time period, Paying them Completely.

This isnt related to the thread but more to the comment.

I once read, call it a theory ...

Majority of people believe that a person that earns 80kpa believes he can only survive on 20kpa whilst a person earning 500kpa generally believes there is no way he could survive on less then 80kpa.

well most peoples train of thought is the change in the amount that the person believes he can survive is determined from his income, although this is a valid possiblity is it not more likely that he who earns 500kpa earns that because he thought there was no way he could survive on less then 80k

Maybe I'm just rambling early in the morning though.

 

[kotim]

I as a yong unknoweldgable fella bought a good house in Townsville in 1991 for 113 grand, had offers 18 months later near the 150 grand mark, but did not take it, as I thought I was going to be "rich" at that rate. Well the downturn happened and due to curcumstances I offloaded that same house for 137 grand in 2002, some year or so before the next boom.

Now had someone of bought the house from me in 193 for 140-150 grand, then basically ten years later it was worth no more.

The simple fact of the matter is that the same thing is going to hapen again. Those who paid high prices towards the end of the boom are going to see no real increases in the value of their property until we have a new boom in 5-10 years time. If as people think that the stimuluses etc work, then we are going to be faced with extremely high inflation wi]ich means skyrocket interest rates relative to now.

If the world stimulus packages don't work big time then we don't have house price increases, if it work, we will have house price increases along with high interest rates, meaning that many who bought during recent, current or short term future times are going to be whacked by huge interest rate rises.

It is human nature that people do not fix their rates untill it gets too high. Sure some do, but the vast majority don't and won't, because beside human nature, they have been conditioned with low interest rates over the last 10 years.

 

[Beej]

I as a yong unknoweldgable fella bought a good house in Townsville in 1991 for 113 grand, had offers 18 months later near the 150 grand mark, but did not take it, as I thought I was going to be "rich" at that rate. Well the downturn happened and due to curcumstances I offloaded that same house for 137 grand in 2002, some year or so before the next boom.

The real moral of this story is you should not have sold your house in 2002, unless you were doing it to upgrade and therefore paid a similar amount less for the new house you bought. Then you would be laughing right? You can't time any market and pick the tops/bottoms - I think with R/E this rule applies doubly so.

PS - don't know what goes on with Townsville house prices, but in Sydney if you bought in 1991 and sold in 2002 you would have got more like 2.5-3 times what you paid in 91, depending where you bought!

Cheers,

Beej

 

[kincella]

kotim...I find it hard to believe that buying a house in 1993, it would be the same price 15 years later....in 2008
in june 2007 the median price was 293500.....
generally , australia wide, the houses I see as not keeping up in price are usually former public houses...and some houses in a bad spot...every town has a bad spot

 

[Knobby22]

Kotim

I agree.
I know someone who bought and sold in roughly the same period ,'86 to '93 in Kensington, inner city Melbourne, and made no money despite some refurbishments. The boom then occurred greatly increasing the price.