House prices to keep rising for years

[IFocus]

GERALDTON WA......

yesterday auction with reserves at 90k on blocks selling for 220 a year ago .utakarra

4th april .. auction with reserves at 70k for blocks selling at 120-180k a year ago .cape burney

april .auction with reserves at 70k for blocks selling 140-220k a year ago .. acacia ridge

think theres one more "bargain basement "auction happening in april but cant recall from top of head

lol bet them ppl that bought house and land packages in these estates a year or 2 back not feeling so great

but hang on i read here that we still in a boom ???

Saw that Nun boom / bust central up there currently also know people who brought into Hopetown before BHP shut Ravey down.

It will be interesting to see Perths Listing levels for March, rents still seem strong and the FHB's are buying up stock in Mandurah.

The economy has held up much better than my wildest dreams long may it continue, I still think we are in for a hit as the numbers keep trending down.

 

[kincella]

banks slashing deposit rates to 1.5% or 2%

in anticipation of the big rate cut due next week...

***so much for holding cash....then you have to pay tax on the miserable earnings......pity the poor pensioner trying to live on his interest......

extract.........

THE MAJOR banks are aggressively repricing their deposit books ahead of next week's expected rate cut by the Reserve Bank.

With the political pressure mounting on all banks to pass on the full benefit of further easings of monetary policy, two of the major banks have taken drastic steps to protect their funding margins by slashing deposit rates.

From this morning, National Australia Bank will slash the rate it pays on three month fixed term deposits from 4.2 per cent to 2.1 per cent.

The NAB move comes after more aggressive repricing by Commonwealth Bank in recent weeks in which it slashed its three month fixed term deposit rate from 4.2 per cent to 1.5 per cent.


http://www.news.com.au/heraldsun/story/0,21985,25259667-664,00.html

 

[Beej]

New home sales up again in February:

http://business.smh.com.au/business/low-rates-grants-spur-new-home-sales-20090330-9fzc.html

Low rates, grants spur new home sales
Chris Zappone (SMH)
March 30, 2009 - 9:35AM

New home sales have posted gains for the second month running, as buyers warmed to lower interest rates and more generous government grants.

Total new home sales grew by 3.9% in February, following an 8.3% increase in December, the Housing Industry Association said.

Cheers,

Beej

 

[gfresh]

T minus 3 months..

Shows the government needs to double the grant for new homes, and remove the grant for existing homes. People want a discount, they have to buy new place, with the accompanying boost to construction employment, and related industries.

 

[kincella]

but most new homes are out in the suburbs..and the kids dont want to live out there....houses already 200k cheaper out there...so they dont need 21k plus all the other benefits...saw one advert last night ..take off 40,000 for fhb

I would suggest a flat 5000 gift to fhb.....but only if they top it up with cash for the rest of the deposit....no difference between now or old homes...make it fair for everyone....plus a 6 month history or regular savings... so they dont get a temp loan to fib their way
ps I disagree with it anyway...was only supposed to be a temp thing for the gst

 

[gfresh]

Well they have to make it attractive enough so they *do* want to live there I know they are not ideal in terms of facilities or transport though, but it doesn't help there is no real reason to live in a new home if that is what the Government is trying to do.

Not sure in Melbourne these days, but I know in QLD most home+land packages are low $400's. An established house within 10km from the city can be found for low 400's. There isn't too much incentive to go for the housing-estate house, especially when you are being subsidised to buy an established property.

 

[kincella]

gfresh...
qld is like another world....400k's and 10k from the city ??....not in Melb...you need to go out 60klm's to find a cheaper established house in the 400k range....and the new ones are under 300k...but its further out....
but then again only a half hour by the freeways to the city....try narre warren in the south....or places north...around 250k's for an old home...was an hours drive, now with freeways its half the time....
I mean how cheap is that...its like a tree change half an hour from the city....and everyone using pub transport...trains...they are overloaded, and it will be fixed if we get a liberal govt back in

save 100k on mortgage and travel an hour each day round trip...
but 400k sounds a good deal for only 10k's out....

 

[Uncle Festivus]

Hmmmm...... interest rates at 1.5% you say, new house construction boom....surely make a bit of a dint in the 'chronic shortage' argument? A glut of homes, immigration cut's, and a recession.....prices will go through the roof for sure

Beer & skittles through rose tinted glasses....perhaps too much beer?

I did my own visual survey of the state of the recession - I walked down George St Sydney today. Usually shoulder to shoulder around the main dep stores, but today mostly tourists with camera's and plenty of room. And talked to a girl who was going for a job interview after getting put off with 1 weeks notice after 10 years service. She said there's just so much competion for every job going, hardly makes it worth while. The downturn is hurting badly, and we are not even officially in recession yet!

 

[kincella]

some of us have been bunkering down since Jun 07...why...history shows there is always a negative for the economy when there is an election looming...and we were looking at the big 3...ours the UK and the US

did my last spending in May 07.....then started putting the money away for all those rainy days on the horizen...
thank goodness I did...had some idea just how bad the new govt would screw things up....and sure enough rate rises to almost 10% within a year....unbelievable...
ps I had survived the 18% rates of the former labor govt....
so had some idea of what may be in store.....
so asset protection became a priority

 

[Beej]

some of us have been bunkering down since Jun 07...why...history shows there is always a negative for the economy when there is an election looming...and we were looking at the big 3...ours the UK and the US

did my last spending in May 07.....then started putting the money away for all those rainy days on the horizen...
thank goodness I did...had some idea just how bad the new govt would screw things up....and sure enough rate rises to almost 10% within a year....unbelievable...
ps I had survived the 18% rates of the former labor govt....
so had some idea of what may be in store.....
so asset protection became a priority

Hi Kincella - good strategy. But re the political commentary, to be fair you know the rate rises mostly occurred under the previous governments watch and were pretty much their responsibility?? Or do you also "credit" the current government with "getting rates down" to 5%?? (which you would have to do if you are also going to "blame" them for 9/10% rates in the first 6 months of their first term!)

Cheers,

Beej

 

[moXJO]

Hi Kincella - good strategy. But re the political commentary, to be fair you know the rate rises mostly occurred under the previous governments watch and were pretty much their responsibility?? Or do you also "credit" the current government with "getting rates down" to 5%?? (which you would have to do if you are also going to "blame" them for 9/10% rates in the first 6 months of their first term!)

Cheers,

Beej

Or the conspiracy theory
Do you blame the RBA for pandering to labor, and raising rates during an election when they were not needed. Only to drop them and then brown nose Rudd’s spending polices. Hmmmm

 

[kincella]

just wondering with all this emphasis on the fhb's...where are all the sellers going to ??? what are they doing ??? surely not all heading out to live in a tent in the bush...
so I think those sellers will be upgrading to the next bigger house.....due purely to the low interest rates and lower prices...some will even get their dream home...you know the ones who settled for the little place out in the burbs for their first homes....
some of the stuff that comes out of the media everyday...seems just so one sided...so you should be asking what is on the other side of the equation...

lets see....those upgraders can probably afford a bit more now...due to the lower rates

 

[kincella]

beej, to be fair yes rates were rising under Howard...to slow the economy...but to go up by 3% within such a short term under labor...was wrong...they never waited to see how the economy was slowed by it all...
it appeared to be all hyper with labor.....focus on china and resources, but back in the real world things were already slowing down....
take the average mortgage holder at 250k...rates at 7% was an interest bill of 17500...at 10% it was 25,000 or another 700 pm plus to find....that was grossly unfair to all..
people like myself with a couple of properties...meant that rise was magnified...5 times... with no offsetting income or benefit to balance against the rises..
like I was not earning a resources based hyper income that would have lessended the impact....
I know quite a few people who have lost a job purely from an interest rate perspective....and that was instigated before the GFC....they have found jobs since....but outside of their career paths

 

[satanoperca]

Kincella,

All the upgraders including myself that I know are not looking at upgrading at the moment but rather consolidating debt. No good upgrading if properties are falling, just increase potential losses.

The FHB is the only market alive it would seem at the moment.

 

[Beej]

beej, to be fair yes rates were rising under Howard...to slow the economy...but to go up by 3% within such a short term under labor...was wrong...they never waited to see how the economy was slowed by it all...

Hi Kincella. mostly fair points, and I don't want to stay off topic for too long! However....

1) Let's not re-write history! Rates only went up three times after Labour got to power federally - 0.75% in total, vs 9 rates rises from the bottom under Howard - 2.25% in total. The bulk of the 3% rise that got us to 9/10% mortgage rates were under Howard, and the upward trend was driven by government fiscal policy response to economic circumstances under his watch. Here is a graph of RBA cash rates over time:

2) "They" are the RBA, not the government. The RBA is meant to be independent remember.... That's actually what annoyed me so much about much of Howards election rhetoric - statements like "rates will always be lower under a Liberal government". Anyone that knows anything about economics laughed at this assertion, and the current situation shows it for the complete lie that it was. It was just pandering to the ignorant masses....

Kincella,

All the upgraders including myself that I know are not looking at upgrading at the moment but rather consolidating debt. No good upgrading if properties are falling, just increase potential losses.

The FHB is the only market alive it would seem at the moment.

I upgraded late last year (sold PPOR plus one IP), as did my sister/brother-in-law, plus I know several other people who see/saw this market as a fantastic upgrading opportunity. If you look at the Sydney and Melbourne auction results posted regularly here, you will see the median price and volume of properties sold at auction has risen significantly this year compared to last half of 2008. The numbers of $1M+ and even $2M+ sales have been steadily increasing all year. That is a pretty clear forward indicator to me that there is a lot of upgrading activity flowing through now, and this looks more like it is building momentum rather than losing it. Last weekends Sydney auction median price was the highest since mid last year at ~$685k.

Based on the data so far this year, it looks like the optimum upgrading opportunity (ie, lowest change over cost, best availability of decent property and minimal buyer competition = maximum opportunity for price reduction/negotiation), was around Nov/Dec last year in Sydney. Of course this year may well provide similar conditions again, but right now things are a little "warmer" than last year in nearly all price segments.

Cheers,

Beej

 

[ryang57]

haha why dont we all abstain from common sense

now this could have been determined in 2007 and years before hand even

When you get newpaper articles - housing unaffordable

that means it is "u-n-a-f-f-o-r-d-a-b-l-e"

that means people do not buy - the only thing which increases prices is another buyer

that means there is a widening gap between incomes and asset values, which matters significantly, because most of those incomes are going toward paying off the debt towards those assets.

EVERY TIME IN HISTORY THIS HAS EVER HAPPENED, HOUSE PRICES HAVE CRASHED - because this is a pattern that happens at the end of a boom cycle.

Its basic common sense for anyone familiar with traae cycles.... some people seem to want to live in fantasy land and just deny basic common sense... good luck with that

No matter the commodity. There are always winners and losers. People make money off of people losing money. Not everyone can make money on a commodity in the realms of speculative investment. Eventually it has to go down, and go down big if it has not for a while, to enable the winners. common sense. use your brain given to you. There is always a downside, to correct the over speculation, and house have been overspeculated for decades.

 

[kincella]

oh dear...a gung ho new comer who looks intent on stirring things up in here....
insulting people will get you no where
but good luck anyway

 

[Beej]

Again, not sure whether to post this here or in the prices to fall thread:

Your house is safe, RBA says
Chris Zappone
March 31, 2009 - 11:29AM, {SMH 31st Mar 09}

Australia's house prices will hold up better than those overseas, despite the slumping economy, the Reserve Bank said today, largely because of the soundness of the loans underpinning the market.

"We continue to believe that the market here will hold up better than overseas,'' RBA deputy governor Ric Battellino said in a speech to the Urban Development Institute of Australia in Brisbane.

"There are a number of reasons why this is likely to be so, but perhaps the most important is that we did not have the same deterioration in lending standards that occurred elsewhere.''

"By and large, the great bulk of Australians who took out housing loans have been able to afford the repayments,'' he said.

With fewer defaults knocking values down, Australian housing prices have only dipped 3% in 2008, compared to the 20% falls seen in the US and Britain, he said.

... [snip read article for rest]

http://business.smh.com.au/business/your-house-is-safe-rba-says-20090331-9hji.html

So the RBA is not predicting any boom or anything in the short term, but as many argue here, they are suggesting that any great crash in house prices is very unlikely in Australia for the reasons stated, which mirror many of the arguments made on our ASF threads.

Also an interesting stat from the article - current mortgage arrears rate = 0.5% (ie 1 in 200 loans). Of those even only a small percentage will result in a default and mortgagee sale. This is a TINY rate compared to the US and the UK:

Mr Battellino said that in spite of the slumping economy, the 90day arrears rate on housing loans is only 0.5% "which is broadly in line with its longrun average'' but well under countries like the US and Britain.

Cheers,

Beej

 

[singlefished]

just wondering with all this emphasis on the fhb's...where are all the sellers going to ??? what are they doing ??? surely not all heading out to live in a tent in the bush...
so I think those sellers will be upgrading to the next bigger house.....due purely to the low interest rates and lower prices...some will even get their dream home...you know the ones who settled for the little place out in the burbs for their first homes....
some of the stuff that comes out of the media everyday...seems just so one sided...so you should be asking what is on the other side of the equation...

lets see....those upgraders can probably afford a bit more now...due to the lower rates

There's a good chance that a decent proportion of sales are investors dumping their IP's and won't be requiring to pull out the camping gear.

I don't think you'd be safe to assume that it's only upgraders selling into the current market.... and I'm pretty sure there's a lot of IP owners out there who could be facing unemployment who, unlike yourself, aren't quite as bullish as they used to be given the state of the economy.

 

[satanoperca]

http://business.smh.com.au/business/your-house-is-safe-rba-says-20090331-9hji.html

So the RBA is not predicting any boom or anything in the short term, but as many argue here, they are suggesting that any great crash in house prices is very unlikely in Australia for the reasons stated, which mirror many of the arguments made on our ASF threads.

Also an interesting stat from the article - current mortgage arrears rate = 0.5% (ie 1 in 200 loans). Of those even only a small percentage will result in a default and mortgagee sale. This is a TINY rate compared to the US and the UK:

Interesting, how I read it is; yes we are better off than other countries for a number of reasons, but we are going to see housing prices fall, just not as much as other countries. It sort of like one having a cold and the other pnumonia, both are sick, just one sicker than the other.

Also, while default rates are low, they are on the increase which is surprising given the low interest rates and will increase if the prediction of unemployment rising to 8% this year becomes reality.