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Unemployment is THE major factor. If you don't have a job interest rates don't mean much to you.
House prices to keep rising for years
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Unemployment is THE major factor. If you don't have a job interest rates don't mean much to you.
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bingo
Discussed ad nauseum here over the past few pages. You believe that if you like, but historically rising unemployment actually has not had much of an impact on house prices at all - certainly far less than the property bears here are expecting. The last major boom (1999) started while unemployment was 7%. From 1991-1993 the unemployment rate rose to 11% yet median property prices increased over that period. Go figure!
Beej
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Low interest rates are what fueled this bubble in the first place, somehow sometime soon it will all become clear.
Massive unemployment will counter the interest rate factor and prices will fall, the catalyst will be the end of the doubling of the FHBG, until then there will be a frenzy of activity to get in before the end of June, if Rudd continues the bribe he will go down like Whitlam in a flurry of incompetence.
Massive unemployment will counter the interest rate factor and prices will fall, the catalyst will be the end of the doubling of the FHBG, until then there will be a frenzy of activity to get in before the end of June, if Rudd continues the bribe he will go down like Whitlam in a flurry of incompetence.
But Mr Burns you seem to be forgetting that the FHBG was started by your heroes Mr Howard and Mr Costello all the way back in 2000!!!
Were they incompetent as well or do you only use that label for Labor politicians? Me I think they are all equally capable of incompetence, whatever the political flavour Come June all that will happen is the boost to the grant will be removed. I reckon they might even keep it for new houses. If this happens how would that fit in with your "forecast"??Cheers,
Beej
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um maybe have a look at the income verses mortgage size around that time to m8 , maybe you may notice the multiples were a tad less
anyways.. no point discussing anything other than sunshine and lollipops these days as only leads to a sore finger
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But Mr Burns you seem to be forgetting that the FHBG was started by your heroes Mr Howard and Mr Costello all the way back in 2000!!!
Cheers,
Beej
The grant will drop by 50%, the only reason they're rushing in now is because of Rudds incompetant distribution of our taxes, if there's not cheques in the mail there's grants for everybody, boosts his popularity and sends us broke, but I digress, the halving of the FHBG will tip it over the edge, bye bye to the last of whats been inflating the bubble.
Not in Sydney so much: 1992 median house price $180k, average full time wage <$30k. Multiple = 6x plus. Current Sydney median house price $525k, average full time wage $65k (latest ABS stats), multiple = 8x. Interest rates in 1992 - 10%. Interest rates now - 5.x%.
EDIT: And rates just cut by another .25%!
So the multiples are not that different. If you consider the different inflation and interest rate environments, plus consider total HOUSEHOLD income rather than just a full time single income, then your point becomes quite moot.
Cheers,
Beej
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The FHBG come June should be continued only for new homes and reduced back to the original $14,000. This at least stimulates new development, employees people etc. An even better idea would be change it from a grant to a low interest loan, similar to HECS. I think it is ridiculous that FHB using the grant and no deposit savings of their own have been able to purchase homes, that is just asking for trouble if the economy slows or interest rates return to the mean.
If the grant is removed I would expect to see a heavy reduction in the number of FHB in the 3rd & 4th Qtrs. Much of the demand has already been pulled forward already as FHB's are scared that the grant might end come end of June.
The changing in lending criteria by the banks will also have an impact on FHB's if the grant no longer can be used as a deposit along with the reduction in LVR's to 80-90%. If this is the case, I would expect suburbs that have seen increases in the last six months due to FHB will see half of those gains lost in the 3rd and 4th qtrs of this year unless we see a reduction in IR.
Not all people are effected by housing prices changing, eg my parents who are retired and own their house outright. They don't care if it goes up or down, they need a place to live and will not be selling in the near or distant future. They do care about current interest rates however, the being to low and the ROI is crap at the moment along with the lose in capital from share loses last year.
If the grant is removed I would expect to see a heavy reduction in the number of FHB in the 3rd & 4th Qtrs. Much of the demand has already been pulled forward already as FHB's are scared that the grant might end come end of June.
The changing in lending criteria by the banks will also have an impact on FHB's if the grant no longer can be used as a deposit along with the reduction in LVR's to 80-90%. If this is the case, I would expect suburbs that have seen increases in the last six months due to FHB will see half of those gains lost in the 3rd and 4th qtrs of this year unless we see a reduction in IR.
Not all people are effected by housing prices changing, eg my parents who are retired and own their house outright. They don't care if it goes up or down, they need a place to live and will not be selling in the near or distant future. They do care about current interest rates however, the being to low and the ROI is crap at the moment along with the lose in capital from share loses last year.
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um sydney is not a whole country , but what i can remember is a different story when it came to buying in perth and melbourne........ a lot less of a multiple compared to now ..
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Well I for one am sick of buying other peoples homes for them through my taxes, no one did that for me.
Yes well houses used to be cheap in big country towns. Then they grow into cities like Sydney, and they get expensive, and stay that way..... hope you didn't miss the boat!
Cheers,
Beej
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now that was a very immature post beej and had completely nothing to do with the point at hand .
i did well actually
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They dont stay that way at all, they drop then recover, when there's a bubble it bursts and thats what's going to happen here, but with extra bursting power helped by Kruddonomics, prices will recover but only when the economy is fixed not patched by Dumb and Dumber.
Miss the boat ??? LOL spoken like a gold Coast property developer, from the poorhouse.
Yep - I've got my white shoes on today too!
Sorry - I'm in a good mood today. The first part of my comment was relevant though! Glad you did well
Beej effectively 91-93 was part of the last "boom" in house prices prior to the most recent one in the 2000's. But after 1993 house prices went backwards and then sideways for between 6-10 years depending upon where you live. Not only that rent peaked in 1993 in many places and then went down to sidesays for quite a few years.
Not sure where you get that data from? The previous boom started in 1987/88 and prices rose rapidly up until 1989/90 (they more than doubled in that 2-3 years). There were then some falls through 90, followed by a flat-ish period from 1992 through to about 1993/94 (there was some moderate growth, but nothing dramatic). It was also difficult to buy a decent house in the early part of this period as there wasn't much good stock on the market and volume was thin. In 94/95 things started to take off and that was really the start of the most recent boom, which in Sydney at least pretty much finished in 2004. I think it may have started later and finished later in some other regions, and maybe still going in Darwin as we type!
Here's an article I've posted before that shows Sydney median prices (with some interesting historical commentary) up until 1994:
I see the current period (the year just gone - ie start/confirmation of recession, beginning of rising unemployment, rapidly falling interest rates etc) as being very similar to 1990 - moving into that 91/92 type period this year and next - setting up for the next real boom in 3-5 years time.
Cheers,
Beej
hello,
good evening, just back from tennis tonite (close match, two sets to one Robots way at end)
wow, my money renting rate is going down again, this is amazing
and people suggest getting out of debt, hahahaha
another reduction, paradise
I wonder if Rudd can fix the internet in the UK as well?
thankyou
robots
good evening, just back from tennis tonite (close match, two sets to one Robots way at end)
wow, my money renting rate is going down again, this is amazing
and people suggest getting out of debt, hahahaha
another reduction, paradise
I wonder if Rudd can fix the internet in the UK as well?
thankyou
robots
Beej it travels up the east coast, I can tell you that North Qld which obviously gets the boom last in the East Coast was getting good price growth through to 1993, but that was effectively the end of it. The boom up there only started again in 2003 and that was after the boom had obviously allready started much further down the east Caost and worked its way up.
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And, your RE friendly bank buddies have already indicated that the parties over - no more reductions due to the high cost of funding. Find out where all this housing 'credit' is coming from & you will see why the debt binge will shortly come to an abrupt halt, and property will be the worst place to park spare cash. Game, set & match to irrational unproductive debt
Debt is being called in........
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