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House prices to keep rising for years

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festivus....
...the govt stopped building and providing public housing in the 1970's
....whose money was used to pay for that now ???? yes it was us the taxpayers.....
so the tax breaks go to the private market to provide housing for the public.... the private investor provides a far better and more comfortable house than the govt funded thing ever was....and better cost affective
or more economical

next...there may be plenty of land....but Vic has a 2030 plan...its not the developers but the state govts have locked up the land, the state will not allow xxxxx amount of land to be built on....it wants everyone to live in high rise, using the existing facilites....
nsw may be similar....they release so little at a time....and charge huge taxes
state govts and fed govts are very very incompetent.....
so its not as easy to look around and see huge areas of land.....you need a permit to build on it....and thats where the obstacles begin...
I dont know about the other states....but they all seem to follow each other
 




I guess you bias your discussion based on who you're responding to?

So, the extra $7K/$14K incentive becomes LESS significant after a few days of stock market gains and vice versa if it falls right?
 
singlefished said:
I guess you bias your discussion based on who you're responding to?

So, the extra $7K/$14K incentive becomes LESS significant after a few days of stock market gains and vice versa if it falls right?
Click to expand...

Que? Both quotes say basically the same thing? So I guess I don't see the point you are labouring to make (maybe splitting a few hairs? )? If you go even further back into the thread you will find my outlook for the market was the same even before the FHOG boost was announced - the boost was just icing on the cake.

The major driving factors in the current market IMO are low interest rates now really kicking in on top of existing pent-up demand in that FHB segment, with the FHOG boost adding to that, but not the root cause by any means.

The activity in the FHB segment is now starting to show signs of flowing through to the mid and upper price ranges as time goes on (from looking at auction results and sales in the area's I watch closely). The forces acting in the opposite direction are low consumer confidence, concerns about job security, and actual unemployment - clearly the later still has a lot to play out, but based on watching the market through 1991/92/93 when unemployment last rose significantly, I don't expect the impact of this to be as great as many here are expecting, but I think these factors will stop us from entering any real boom or high price growth phase until the economy is in recovery mode.

Beej
 
copied this from another forum....this is a fhb....and he sounds pretty happy
..................................................................................................

mate... i asked the same question a few weeks ago. should i buy or not. i decided that we would rent for another 6 months. then i got a phone call about this house in north lakes qld (the area i wanted to live). my wife and i went and check it out that day. we fell in love with it. a big corner block 775sm(big for north lakes), new pool, 4 bedrooms, outdoor living area, even a garden shed. we knew the owners wanted to sell it quick. we put in a offer well below their asking price and we got the house. mate what a feeling, so stoked. im not an expert and you do what you feel is right, but keep looking and if you see your dream home buy it.
cheers
gizzy
 
kincella said:
and he sounds pretty happy
Click to expand...

and why wouldn't he be, as a FHB he has no idea what he is doing
Ignorance is bliss.

Did he stop and ask why the price was reduced so much, will it come down further ? If the deal is as good as he espouses, does he realise he has probably just started to bring the median house price down, setting a new floor ? He has bought his dream house as a first house, doesn't that strike you as a little "odd" ? I guess every PPOR I have ever bought has been purely for business reasons and I have never had a emotional attachment to a house, the best place I have ever been is here.



and it's just a shack, nestled in the rainforest, alongside a pristine creek in the rainforest of NQ.

All of that said, best of luck to him
 
The joys of renting a house from the banks.
Average salary is $60,658


Average house price is $450,000 - that's 7.41 times the average salary


Assuming "Mr Average" has managed to save a 10% deposit, he still needs a mortgage of at least $405,000 - unless he adds the cost of stamp duty to the loan, which in Victoria would be nearly an extra $24,000.


So, assuming all that, Mr Average will have a mortgage of $429,000. If he takes out a 1-year introductory variable rate of 4.71%, his monthly repayment will be $2,436 per month. That's coming out of his after tax salary of $3,961. That's 61% of his after tax income spent on the roof over his head.

By the end of the first year he will have paid $9,000 off the principal, and $20,000 in interest. By the end of the second year he will have paid a total of $17,500 off the principal and $44,000 in interest.

So by that time Mr Average will have paid $494,000 for his house, which even if property prices stay the same, will only be worth $450,000. And he will still have a loan outstanding of $412,000.

If Mr Average was forced to sell the house and managed to get the same price of $450,000, he would repay the loan of $412,000 and have $38,000 remaining. Of which about a third would go to the real estate agent.

So he gets back $26,000. And because he's paid $44,000 in interest over that period he's actually in the red for $18,000 on the deal. Which means he has less money than when he started, and because he's not a first home-buyer anymore he doesn't qualify for the government handout the next time he buys.
Money morning.
 
oh come on glen...mr average will not get a loan for that amount to begin with...that loan needs two incomes
the bank will not lend an amount that requires 70 % of your income
the banks work on about 30% of income to pay the monthly loan...
currently even with high prices..the average is 32% of income...it was published some where this week....
fairy land stuff talking about an income of 60.000 against a loan of 450k
 
Glen48 said:
The joys of renting a house from the banks.
Average salary is $60,658

[snip]

.
Click to expand...

What drivel! Really - please post on the house prices to fall thread if you really must post utter rubbish like that!

Here's just a start as to why:

1) Mr Average probably also has an average household which means a household income of $80k-$100k, a wife and 1 or 2 kids.

2) If Mr Average doesn't already own a house (and the odds are he actually already does), then he would be a FHB - FHBs typically purchase a house in the lower 30% bracket, rather than the median (or even average) house. That means he is more likely to be buying a house or unit for around $300k-$350k, not $450k. People who buy the median house tend to be either higher income earners or 2nd home buyers upgrading.

3) You haven't accounted (as usual) for the rent Mr Average would otherwise have paid had he not bought his house. Mr Average would pay average rent, which is about $400/week - $20,800/year. So if renting instead of owning, over the same 2 year period he will have paid $41,600 in rent - so the difference is only $2,400 in the outcome from your example (which presumes no change in house price).

4) Buying a house is a long term proposition - anyone who flips a house in less than 2 years would be lucky to not lose money. But over periods of 10 years plus they are certain to be way ahead as compared to the alternative.

I've worked up a spreadsheet that I might post later that compares the renting vs the owning scenario for a FHB buying a house for $390k, and it projects forward year by year over 20 years. In all but the most apocalyptic scenario's for house prices (or most fantastic investment return assumptions for the renters spare cash) the home owner ends up way WAY in front after 5 years or longer (the longer the better!).

Beej
 
Trevor_S said:
and why wouldn't he be, as a FHB he has no idea what he is doing
Ignorance is bliss.
Click to expand...
I've been staying out of this thread because I wanted to get off the merry-go-round, but seriously Trevor that is a very condescending statement to make and typical of the assumptions in here.

Just to save you all the time:

CTRL + C = Copy
CTRL + V = Paste

Because that's all everyone has been doing for 220 pages. Bye.
 
I was just wondering has anyone done a spreadhsheet for owning one property(your PPOR) and then upgrading to a bigger one and keep updating against owing 3 or more rental properties of the same money outlaid?? Taking into account CGT free vs CGT, interest deductibility, land tax vs no land tax etc etc. Which strategy is the most worthwhile?
 


Way too vauge, Generally speaking the higher your tax bracket the more benefit you will gain from the neg gearing on the investment properties, Mainly depends on the rental yeilds for the properties, your risk tolerance and about a million other property specific factors...

Having non deductable borrowing is silly, at the same time negative gearing as a concept is a bit of a stretch at the moment as well as it relies heavily on an increasing property market and lets face it who knows where it is going at the moment..

~Kieran
 
negative gearing is fine....just another means of providing housing for those who choose to rent...and the renters have been growing each year...in the 1950's it was split 50/50 now its 70 owners to 30 renters...roughly 10% of rental accommodation is provided by the govt...aka housing commission houses and flats...the balance is provided by the private investor

the housing market will recover and be fine....
oh and the way all our 'newbie govts' worldwide are printing money and throwing it around...I would think those holding the houses should be in an even better position...when this all washes ashore....
 
robots said:
hello,

great opinions from those people just like yours and mine, fantastic

thankyou
associate professor robots
Click to expand...

hello robots, i was watching the today tonight program this evening and I saw a guy in melbourne hanging off the back of a truck whilst he was riding his pushie along, trying to get a free ride he was. unfortunately he fell off in front of the news crew and i am concerned, was that you? are you ok?

let us know if you are ok.

thankyou,
bill m

ps. how is st. kilda? over here, things as usual.
 
Following article confirms what I've been saying here for the last 4 Months.
-------------


Grand time to be buying first home

FIRST-HOME buying is reaching fever pitch at the moment with hundreds of young people turning their backs on exorbitant rents and getting into their own home.

Agents up and down the peninsula report that anything under $500,000 is selling like hot cross buns with the favoured suburbs being Dee Why, Manly, Fairlight, Narrabeen and Collaroy.

FULL STORY HERE
 
 

Sorry Beej, but the 2 statements posted are actually quite contradictory and far from similar... and it's certainly not a labour, all I did was copy and paste so couldn't be easier :

One post states that the FHOG boost (nobody can deny that this isn't "artificial") combined with the low interest rates is flowing through to the more expensive sectors.

The other post declares that the FHOG is negligible and is insignificant in the big picture.

Therefore..... your question of "How exactly is the R/E market being artificially propped up in reality?" has been answered in the first statement and contradicted in the latter.

Q.E.D.

The Government clearly wouldn't have introduced the additional stimulus if they thought that the lowering of interest rates on their own would solve the housing problems..... but, the combination of a cash boost in tandem with the ongoing lowering of interest rates has certainly had the desired effect and upped activity in the FHB part of town and can most definately be considered an artificial propping, especially if you believe it to be flowing through to the more expensive market sectors.

I don't believe the problems in the economy have yet been resolved and I know you are realistic enough (and the Government) to recognise the current economic downside risks... so with interest rates alone not being enough to stimulate, how can all the current activity not be considered artificial.

It can't really be explained by the pent up demand argument either, example: look at domain.com, search Parra and surrounds with a max price of $450K, update to only show uncontracted, sort by price, over 400 listings.... have a tick through the first few pages showing the lowest rungs of the ladder in an extremely well serviced satellite. There is such a glut of cheap unsold/uncontracted property that to argue demand is outstripping supply is unrealistic.



Anybody read this yesterday???

30,000 great Aussie dreams 'to die'

MORE THAN 30,000 homes will be repossessed or foreclosed by the end of the year, a report says.

http://www.news.com.au/business/money/story/0,28323,25235255-5013951,00.html


Fujitsu Consulting apparently but nothing on their website yet... so don't shoot the messenger
 

didn't Mr Average pay a 45k deposit and 44k interest before he got back his 26k so he's (89-26) $63,000 in the red
 
singlefished said:
Sorry Beej, but the 2 statements posted are actually quite contradictory and far from similar... and it's certainly not a labour, all I did was copy and paste so couldn't be easier :

....

Q.E.D.
Click to expand...

*sigh*. Not QED at all. In the first post I sated that the ACTIVITY in the FHB market segment is beginning to show signs of flowing through to upper segments:. Here's what you actually quoted me as saying:


It doesn't matter whether that's primarily, partly, or not at all due to the FHB grant boost. Get it? You are now trying to twist those words to mean:

singlefished said:
One post states that the FHOG boost (nobody can deny that this isn't "artificial") combined with the low interest rates is flowing through to the more expensive sectors.
Click to expand...

So please given that you are quoting me verbatim at least try and comprehend what the meaning of the words i actually wrote are!

Now the second part, you are now twisting my statement to mean:

singlefished said:
The other post declares that the FHOG is negligible and is insignificant in the big picture.
Click to expand...

When in fact, as originally quoted by you, what I wrote pertaining to the FHBG boost was:

Beej said:
It provides an incentive, but only a small one IMO in the grand scheme of things.
Click to expand...

I think there is a big difference between suggesting the the grant boost is perhaps only a small incentive relative to the other major factors (pent up demand, stable prices and low interest rates), and your twisting of that statement to now mean that I said the impact of the grant is "negligible and insignificant"

Therefore..... your question of "How exactly is the R/E market being artificially propped up in reality?" has been answered in the first statement and contradicted in the latter.
Click to expand...

I think this question still stands - the grants are having an impact but it is my contention that the fundamental factors are the primary drivers right now: demand, low interest rates, stable/fallen prices. Rising unemployment, low consumer confidence etc are the factors that counter these fundamentals, so I think the end result will still be only small changes in median prices on lower sales volumes until we see economic recovery at which time watch out! (2011 perhaps?).

Beej
 
Some suburbs that have risen almost 50% last year

oh dear, its not all doom and gloom, well not for every body....

hehehehehehe
..........................................
They included the exclusive Sydney harbourside suburb of McMahons Point, where house prices jumped 47.4per cent to a median price of $1.675million in the 12-month period.

Greenwich had a similar 49.8 per cent rise in unit prices to $490,000, giving the north shore suburb the distinction of having Australia's largest price increase.

http://www.theaustralian.news.com.au/business/story/0,28124,25242049-25658,00.html
 
Hi Kincella,

Thanks for the link to the Australian article but I am a little confused with the reporting.

I apologise for the formating.

"Exclusive Portsea topped the housing list in Victoria, recording a 38.6per cent increase to record a median price of $1.455million." The Australian
PHP: 
RPData on Portsea. 
Portsea    Mornington    Peninsula LGA   
 period     % Change     % Change  
 
 2009     -53.6%          -7.3%   
 2008      50.5%           10.7%  
 2007      -15.5%          6.9%   
 2006      20.4%           8.7%  
 2005      1.5%            1.6%
-

So yes it went up last year and come down the same amount this year. Once again only half reporting by a reporter.

"Greenwich had a similar 49.8 per cent rise in unit prices to $490,000, giving the north shore suburb the distinction of having Australia's largest price increase. " The Australian
PHP: 
RpData
               Greenwich    Lane Cove LGA  
  period       % Change  % Change  
  2009          0.0%          7.8%  
  2008          30.1%        9.7% 
  2007         -22.9%       -0.6% 
  2006         -6.0%          4.0%  
  2005          3.4%          3.2%
-

Hardly something to crow about if you are a long term investor, previous two years showing negative growth for Greenwich. Housing in Greenwich down -13.6% for 2009. Looks more like over a 5 year period, nothing more than house pricing increasing in line with inflation + 1-2%.

"The Snowy Mountains township of Jindabyne recorded the state's second-biggest jump in house values, up 37.9 per cent to a median price of $482,000. " The Australian
PHP: 
RPData 
recent median sale prices
                             Jindabyne          Snowy River LGA   
 period                 median price        median price   
 January 2009        $ 475,000           $ 297,500   
 December 2008     $ 475,000           $ 297,500   
 November 2008     $ 475,000           $ 475,000   
 October 2008       $ 490,000           $ 187,500   
 September 2008    $ 552,500           $ 452,000   
 August 2008         $ 370,000           $ 188,500   
 July 2008             $ 510,000           $ 126,000   
 June 2008            $ 510,000          $  127,500  
 May 2008            $ 510,000           $ 290,000  
 April 2008            $ 380,000           $ 205,000   
 March 2008           $ 579,000          $ 345,000   
 February 2008        $ 579,000         $ 452,000
-

Looks like the median price has been falling if anything. Nothing stella there.

While it is interesting an article trying to show incredible house growth, it would also be interesting seeing the worst performing suburbs in Australia for a more balanced view.

Only time will tell how what trend the housing market is currently in - to early to predict. It would seem with the benefits of FHBG, low interest rates & low unemployment, overall the housing market is holding ground or showing slight falls on average.

I wonder how the market will react if any one of the following changes :
1) FHBG is removed
2) interest rates more up again, low interest rates are great for mortgage holders, crap if you are retired, yes retirees deserve a break to.
3) Unemployment rises to around 8%. Already showing signs of steady increase.

Cheers

Benjamin
 
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