House prices to keep rising for years

kincella · 1 May 2009

Lancelot, thank you for bringing that to my attention......
I have shown the others the charts which prove the US and the UK follow AUS...they do not lead us on housing....
oh and for 'gfresh'...see the ref about stamp duty...thats why in AUS we have accurate information about house prices...we all pay stamp duty on each house.....not so in the other countries...where it can be a hit and miss....
extracts from the link on Lancelot's post
................................................................

The RBA has been at pains to highlight the fact that Australia’s housing market has actually led the US and UK by three years with our boom ending in late 2003. Here, the RBA’s Dr Tony Richards recently commented: “The growth rate of house prices in the past five years has been well below the 8 per cent average annual nominal growth in household disposable incomes.”
First, the ABS provides historical house price index data going back to the mid 1980s on a city-by-city basis (as do many other index suppliers).

Second, since state governments levy stamp duty on all residential transactions, Australia is in the fortunate position where government agencies – typically Valuers General offices – collect 100 per cent of all property sales data and make this available to index providers (who in turn purvey it to the public).

Accordingly, Australian house price indices normally reflect 100 per cent of all sales.
While there has been some critical commentary around the level of mortgage debt in the community, we estimate that the average Australian home loan-to-property value ratio is just slightly north of 50 per cent. That is, the average home owner with a mortgage has around 50 per cent equity in their home (NB: according to the 2006 census, only around half of all home owners have any mortgage debt at all).

kincella · 1 May 2009

and this article shows difference in the rate cuts between the countries...plus much more.....
I am about to say ...'I told you so to the bears'...but will give it a bit longer

Another critical factor is interest rates. The UK and USA banks have generally retained a large slice of the official rate cuts for themselves, rather than passing it on to the consumer as mostly happened in Australia (375 of the first 425 basis points worth of cuts were passed on). Furthermore, the UK and USA only started slashing official rates after their house prices were falling sharply and their economies were in serious trouble. The RBA on the other hand has been much more proactive, cutting rates aggressively, ensuring that most of the rate cuts are passed on, and since they were starting from a higher official rate position to begin with, they have had relatively more ammo left in the rate cut gun as well (and even if the banks to not pass on much more from now on, their profits will be increasing encouraging more lending
http://www.businessspectator.com.au...-Blogs-pd20090430-RL4WG?OpenDocument&src=srch

Lancelot · 1 May 2009

Whats this I see

http://www.yourmortgage.com.au/news/3000/default.aspx

London property prices rise for the first time in 12 months

30/04/2009

Amidst continuing dismal property results in the UK, there are some positive price growth figures emerging in select locations, including London.

House prices in prime, centrally located London postcodes rose in April for the first time since March 2008, according to the Knight Frank Prime Central London Index, which went up 0.4%. The news comes as Hometrack, another property data provider, said houses prices in England and Wales fell 0.3%.

Like elsewhere in the US and now Australia, the UK market has been hit by unemployment and decreased lending by the banks. Over the past twelve months, Knight Frank says property values in prime central London have dropped 22.6%, whereas Hometrack's data shows the broader England and Wales market decreased at 10.1%.

Liam Bailey, head of residential research at Knight Frank, warns that while it is good news for the property market to see some positive growth, one good month shouldn't be taken as a sign of anything to come yet.

"Don't read too much into one month's figures," he said. "Nevertheless, house price growth of 0.4% in central London's exclusive postcodes reflects a growing trend towards stronger market conditions which has been developed since the turn of the year."

Bailey said much of the price growth has come in the lower (sub 1m pounds) range, rather than the more expensive properties on offer. Buyers seem to be coming back to the market, as sales volumes have risen by 28% on a year-on-year basis, according to Knight Frank. But that could be held back by fewer sellers, hoping to wait rather than accept a loss.

"Recently we have seen a change of attitude in buyers, wit them losing the fear factor about prices falling considerably further and this has resulted in us agreeing more sales in last six weeks than in the previous six months," says James Pace, head of Knight Frank Chelsea.

gfresh · 1 May 2009

Most of shadow's arguments have been pretty well argued against in other forums with valid points, so I'm sure it will be deja vu reading any replies.

His belief over population growth (looking at the now, rather than longer periods), is not a constant variable, nor is there any real reason this can't change. Plus also the entire part endless migrants coming to Australia is also a little tenuous in a recession and demand for labour being less. I am sure if you looked at the UK 3 years ago migration growth looked strong and their wages looked high.

Rental vacancies again, you can argue that. I've never experienced a problem finding rentals. I can see multiple listings in any suburb I could care to name. Maybe the price is a little high for some, but that doesn't mean there is no vacancies. I don't believe there is any rental shortage, other than being told by home owners and the housing industry (not renters I know!).

Australians are more prone to interest rate policy than the UK/US/others as we have a very high percentage now on variable rates. Monetary changes more quickly flow through to our market. Yes this is a positive.

He claims the US and UK are more heavily based around the finance industry...we are heavily based around the resource industry. Both can suffer heavily in a global downturn. Look at Russia for instance (oil instead of dirt). This doesn't really indicate we're any safer.

Anyhow, while he does use data to support his claims, I think most of it can be argued against. I hope somebody has the hours to write together a good response, like he obviously has spent.

gfresh · 1 May 2009

False claim number 13: ‘Fundamental supply and demand, population growth etc. is irrelevant. Availability of credit is the only factor responsible for house price growth.’

In 2007, house prices in Melbourne rose by over 20 per cent while prices in Sydney rose by only 8 per cent. Did Melbourne have twice the amount of credit available? No. Prices were driven by supply and demand, not availability of credit. Credit is equally available throughout Australia, but house prices do not rise by equal amounts in each city.

That's a piss poor argument to use against that one..

kincella · 1 May 2009

firstly the bad news....the new green star rating will add $10,000 to the cost of new homes from next year
http://www.news.com.au/business/story/0,27753,25413739-31037,00.html

now for the good news
China's manufacturing activity expanded in April to it's highest level for a year...

It sank to a record low of 38.8 in November due to the global financial crisis, but has improved continuously in the five months since, although it only moved above 50 in March.

This "sends a clear signal that real economic activity growth has been improving on a sequential basis from its trough last November," Goldman Sachs said.

http://news.theage.com.au/breaking-news-world/china-says-manufacturing-expanding-20090501-aq08.html

robots · 1 May 2009

gfresh said:
Most of shadow's arguments have been pretty well argued against in other forums with valid points, so I'm sure it will be deja vu reading any replies.

His belief over population growth (looking at the now, rather than longer periods), is not a constant variable, nor is there any real reason this can't change. Plus also the entire part endless migrants coming to Australia is also a little tenuous in a recession and demand for labour being less. I am sure if you looked at the UK 3 years ago migration growth looked strong and their wages looked high.

Rental vacancies again, you can argue that. I've never experienced a problem finding rentals. I can see multiple listings in any suburb I could care to name. Maybe the price is a little high for some, but that doesn't mean there is no vacancies. I don't believe there is any rental shortage, other than being told by home owners and the housing industry (not renters I know!).

Australians are more prone to interest rate policy than the UK/US/others as we have a very high percentage now on variable rates. Monetary changes more quickly flow through to our market. Yes this is a positive.

He claims the US and UK are more heavily based around the finance industry...we are heavily based around the resource industry. Both can suffer heavily in a global downturn. Look at Russia for instance (oil instead of dirt). This doesn't really indicate we're any safer.

Anyhow, while he does use data to support his claims, I think most of it can be argued against. I hope somebody has the hours to write together a good response, like he obviously has spent.

hello,

just like all the points put forward by the those who cannot afford property,

and guess what, prices still high in the sky man

paradise

thankyou
robots

robots · 1 May 2009

hello,

and here in Melbourne being a developer is looking very very rosy, 12mth permits, super funds still loaning,

and 10k to get 6-star just helped the existing stock even more, hold on brothers

splendid

thankyou
robots

kincella · 2 May 2009

Gearing for a housing deficit....its a good article....aimed at investors

Building approvals have collapsed in the past year and completions in 2009-10 could fall below 120,000. Australia currently has one of the (if not the) strongest population growth rates in the developed world and even if skilled migration targets were cut to zero in the years ahead in response to fears of rising unemployment, underlying housing demand would still be 150,000 in 2010.

"We currently estimate that by mid-2010 Australia will have an unprecedented underlying housing shortage of 250,000 dwellings."

Put your money where the transport is

For people looking to take advantage of low interest rates to buy a residential property as an investment, Steve McKnight offers the following advice: "It should have three bedrooms or more and at least two bathrooms. Close to parks and schools is ideal.

"It should also be near public transport. The number of people catching public transport to get to work is going through the roof. In Sydney and Melbourne the train is better than any other form of transport, so people will want to have that flexibility of living in an area where they can walk to a railway station. And they will pay more for it.

"Aim for 680 square metres of land or better, to preserve the potential to sub-divide the property. And if you cannot afford to buy in an A-grade area, buy in the suburb next door. Gradually that A-grade area will price itself out, because people will not be able to afford to live there, and the B-grade area next door will move up in price."

http://www.brisbanetimes.com.au/articles/2009/04/27/1240684398016.html?page=2

Trevor_S · 2 May 2009

robots said:
just like all the points put forward by the those who cannot afford property,

What about, points put forward by those of us that can ? Like the stockmarket in early 2008, people were still buying overprices shares, I see people buying overpriced houses today They are speculating that CG will keep compounding because the CF is sure as hell pretty shi_ty !, if no CG they are going to be left with a white elephant investment. Some respond with "yeah but I am looking over the long term man".. sure, as do I in the stock market but I look for times when there is value before buying, buy then and hold for the long term (and yes I do sell), but not to buy when the (property) market is "sky high", to use your words.

I only have two properties, having come back from 4 over the last few years but I have no debt on either of them, so I am not adverse to resi. property, I just don't see it as a good investment right now.

robots said:
and guess what, prices still high in the sky man

Indeed, so you agree the prices are sky high but sky high prices does not equal a bubble, in your opinion ? that seems an odd stance to take.

robots said:
paradise

Over inflated housing prices is not my definition of paradise, a decent return on my investment dollar is.

kingbrown · 2 May 2009

Well guys put this in the mix now !
Herald Sun here in Melb saying its REIV data

Victorian house prices suffer biggest drop in 40 years
HOUSE prices have suffered their biggest drop in more than 40 years.

The median price has slumped 15 per cent -- or $75,000 -- since peaking 15 months ago, according to new Real Estate Institute of Victoria figures.

And in a worrying trend, the rate of the falls has increased.

there's even a interactive map

http://www.news.com.au/heraldsun/story/0,21985,25415325-661,00.html

kincella · 2 May 2009

kingbrown...you are a bit late...thats already been posted on the 'losing' thread

Ruincity · 2 May 2009

Farout Kingbrown, Heaven forbid a balanced view in this bulls only thread...

Post with the flow or don't post at all it seems.

MrBurns · 2 May 2009

kincella said:
kingbrown...you are a bit late...thats already been posted on the 'losing' thread

Ahh but it's so important to share the news around, i'm just scanning other threads to see if I can slot it in, I'm having flyers printed to go out St Kilda first

No really, these are the figures that have not surfaced until now, everyone knew it was on the skids, the bottom end has been heavily subsidised and still falls, Rudd cannot hold up the entire housing market using tax payers dollars no matter how much he values his standing in the polls.

robots · 2 May 2009

hello,

looking forward to that flyer Burnsie i hope it has st kilda up 4% for q1 09 REIV stats

and looks like my inheritance is doing well with Mt Martha up 14% for q1 09 REIV stats

paradise

thankyou
robots

Lancelot · 2 May 2009

kingbrown said:
Well guys put this in the mix now !
Herald Sun here in Melb saying its REIV data

Victorian house prices suffer biggest drop in 40 years

Nice to see you conveniently fail to mention the 10 best quarterly rises as well, but I would expect nothing less.

MACCA350 · 2 May 2009

robots said:
hello,

looking forward to that flyer Burnsie i hope it has st kilda up 4% for q1 09 REIV stats

and looks like my inheritance is doing well with Mt Martha up 14% for q1 09 REIV stats

paradise

thankyou
robots

After falling around 30% in the previous quarter St Kilda is down 1.5% yoy.
After falling around 18% in the previous half year Mt Martha is flat 0% yoy.

Looks like both St Kilda and Mt Martha have done better(3.2% and 4.7%) than the average when looking at the yoy results.

cheers

kincella · 2 May 2009

Just back from Chapel St.....I have never seen a bigger crowd...so what the hecks going on down there ???
Will someone pleasee tell them we are in a recession, and that they have to stop spending !

MACCA350 · 2 May 2009

Anyone consider these median prices may be skewed by a shift in the ratio between properties properties sold in the lower end and those in the higher end?

For example, take the two scenarios below. Everything is the same bar two removed from the higher range and two added in the lower range, changes the median, but one cannot really say that the values of those that sold have actually changed:

1.1M
1.0M
900k
800k
700k
500k
400k
300k
200k
=700k median

1.1M
900k
700k
500k
450k
400k
350k
300k
200k
=450k median

What's changed is the buyers opting for cheaper house, but that doesn't necessarily mean that the value of those properties have actually changed.

Since there seems to have been a shift towards properties below 500k due to the end of the FHOG boost, the REIV median results could actually be masking a rise in what people are actually getting for their properties in the last quarter or two.

Not sure I'm conveying correctly, but I find myself thinking that the use of a Median method does not accurately reflect changes in actual home valuations..........please let me know if I'm just over thinking things, I tend to do that

cheers

kincella · 2 May 2009

you are correct....in the suburbs that I watch...the lower priced homes were selling at a premium to what they would have achieved in an ordinary market...and since there are so many selling in the 500-600 range....the median will reflect this lower range....it has nothing to do with the value of the house...
so when the media screams the median value is lower than last year....and a smaller number of homes were sold...most homes were purchased by fhb's....
it stands to reason...the median will be lower...
it does not mean the price of the house has dropped...in fact in some areas the price rose...

House prices to keep rising for years

hello

hello

hello

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