House prices to keep rising for years

[Trevor_S]

what a load of rubbish soft dough.....

It isn't, do some reading... eg

http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=13331109

A decade ago Andrew Oswald of the University of Warwick in Britain argued that excessive home-ownership kills jobs. He observed that, in Europe, nations with high rates of home-ownership, such as Spain, had much higher unemployment rates than those where more people rented, such as Switzerland. He found this effect was stronger than tax rates or employment law.

We just have the odd situation in Aus where owing a house has become something to aspire to, and renting frowned upon and the tax law has supported home ownership over renting, taking money away from productive enterprise.


I used to be all for ownership when I was younger and naive but the more I read and looked upon what the rest of the World is doing, I realised it's only that way because it's been that way not because it is inherently better.

 

[kincella]

we all have choices...rent or buy...live in a cheaper suburb or expensive , there are plenty of choices in oz for everyone....its all affordable...
more expensive in the inner suburbs, surrounded with everything within your reach...
or go to the outer suburbs....its so much cheaper...
or is it you would like cheaper housing right in the middle of the city, surrounded with everything.....so does everyone else...hence the market dictates the prices...
there were some rally cheap houses up in Euroa a few months ago.....and loads of places like that....but not many jobs...
I believe there are loads of places around the 200k mark, just half hour from the city on the new freeways and tollways..and probably half that amount for a unit...how cheap is that...
your choice to move to another country if its that important to you...
me I just love Melbourne....

 

[satanoperca]

I believe there are loads of places around the 200k mark, just half hour from the city on the new freeways and tollways..and probably half that amount for a unit...how cheap is that...
.

Now that seems to be stretching the reality a little to much unless they have increased the speed limits on the freeways to unlimited - just had a look.

Cheers

 

[kincella]

well lets try and prove me wrong...firstly narre warren to toorak 30 mins and 35 klm's out
http://www.nowwhere.com.au/tourismv...comboAtt=none&comboVic=none&GoButton=GetRoute

and an extra 5 mins into st kilda road 43 klms
its 20 mins from toorak to the melbourne airport
heres Melton to St Kilda rd about 40k's

http://www.nowwhere.com.au/tourismv...comboAtt=none&comboVic=none&GoButton=GetRoute
and ringwood 31 k's and 31 minutes

 

[kincella]

now for the houses
Melton
brand new 209,000 what a beauty
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=12504997&s=vic&tm=1242375634

Narre Warren beautiful display home 187,000
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=11478477&s=vic&tm=1242375965

whoops Ringwood is more expensive...this one comes in under 300,000
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=95763738&s=vic&tm=1242376248

 

[robots]

hello,

good evening

top posts Kincella, the examples you provide is whats going on across a lot of Australia, you sum up the situation well

you also get a multiplication factor with renovation etc as new owners take over and polish the joint

soft dough, no big deal for me man, you have an opinion, so do I and plenty of others like Keen, Rory, Shadow, Beej, WayneL etc etc

thankyou
associate professor robots

 

[lusk]

well lets try and prove me wrong...firstly narre warren to toorak 30 mins and 35 klm's out


and an extra 5 mins into st kilda road 43 klms
its 20 mins from toorak to the melbourne airport
heres Melton to St Kilda rd about 40k's

and ringwood 31 k's and 31 minutes

now for the houses
Melton
brand new 209,000 what a beauty


Narre Warren beautiful display home 187,000


whoops Ringwood is more expensive...this one comes in under 300,000

Is that 30mins by plane?: For someone that is supposed to be from Melbourne you obviously have not driven during peak hour from any of these places.

 

[kincella]

well I do claim to be from Melbourne....Toorak actually, and no I dont drive to any of those places....
but hey,,,does everyone only travel during peak hour....give me a break
oh a client travelled the Narre Warren route to service his Melbourne clients..he used to say 30 mins drive..either way
I have used that route planner in peak hour to and from the airport....its never much more than the 20 minutes...as per the guide
now we are quibbling about the time ....
I was talking about how cheap house prices are lets see around 200k at 5% 10,000pa interest...about 200 pw...
anyway we can argue until the cows come home

 

[satanoperca]

Is that 30mins by plane?: For someone that is supposed to be from Melbourne you obviously have not driven during peak hour from any of these places.

No we don't drive cars in Toorak, we have private jets to get around.

Does high property prices relative to average incomes make for a higher quality of living for all in society?

Cheers

 

[Bill M]

now for the houses
Melton
brand new 209,000 what a beauty
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=12504997&s=vic&tm=1242375634

Narre Warren beautiful display home 187,000
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=11478477&s=vic&tm=1242375965

whoops Ringwood is more expensive...this one comes in under 300,000
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=95763738&s=vic&tm=1242376248

This is incredible value kincella, too bad I'm up here in "Steak and Kidney" paying double for that. Some people never learn.......... can buy your own place for $200 p/w.......... darn good value.

 

[Beej]

Hi Beej,

Interesting perspective, could you give me your thoughts on :

Does high property prices relative to average incomes make for a higher quality of living for all in society?

Actually I think it does. But to be clear, what you state is not necessarily the goal either. The goal is to simply ensure that all in society have shelter. It should be up the each individual/family to work to improve their quality of living from that baseline - there are no fundamental "rights" in this regards - just look at countries like Indonesia, most in Africa etc to get my point in this regard.

Having said that, I have two more points in response to your question:

1) Yes, in fact higher house prices do improve baseline standard of shelter for all. As the standard of the typical/average house improves, so does that of the basic ones. Eg public housing tenants today would still demand/expect a standard of housing far higher than what they would have got in the past - as the bar has been raised significantly over the past few decades. Properties that today might be sold as a "renovate or detonate" special in era's gone by might have been typical/perfectly acceptable as places to live in as they are/were. Also consider why in AU we don't live in thatch huts or shanty towns like in much of Africa? I bet houses are cheap over there?

2) As any society becomes wealthier, it is inevitable that those at the top of the food chain will always attain more, live better and better etc than those at the bottom. Unless you have communism/extreme socialism, this will always be the case. So focusing on something like average income to median property price ratio's is always going to misleading IMO, as over time this stat is likely to rise. As Kincella points out re Melbourne, plus there is actually heaps of affordable housing even in Sydney where you can buy a house 45min-1hr from the city for < $250k - 3 beds, big back yard etc. That's only 4 x a single average wage or < 3 x average household income. Of course, as the houses get better, locations improve, move closer to CBD, beaches and other amenities, the prices go up. The market is very broad and there IS something there for everyone, and that's without even looking at what you can get units for, the market for which broadens the choice in the bottom/entry level end of the market even further.

So at the end of the day it's all about compromise and personal financial/lifestyle trade-offs and choices; (buy cheap or rent in a better location?), where you sit relative to the rest of the pack financially, and other factors which should be focussed on such as building more affordable housing if that's what people really want.

For another perspective of property have a read through some of the articles on
http://www.earthsharing.org.au/

I live in my community and shelter in my home. What matters is what is outside my front door than what is necessarily behind it.

Cheers.

Well I live in my community as well - but I spend most of my time when not at work in my own house. But maybe you don't have a family yet? I don't know - but to me a man's home is his castle, especially if you have a family!

PS: I'm no hippy either man! But "peace" to you!

Cheers,

Beej

 

[satanoperca]

But maybe you don't have a family yet? I don't know - but to me a man's home is his castle, especially if you have a family!

Yes, I have a great little ball of fun, a 3yr old boy. His quality of life does not amount to the value of the home that he lives in but about the amenities of the community he resides within and the time his parents get to spend with him. High RE prices have not helped his daycare carers being able to reside and hence work in the area he goes to daycare. Higher RE prices in the area have sanitized the area over ten years, removing economic diversity in residents which makes a community sound. High RE prices mean less time nurturing him while working to pay off a mortgage.

I find it hard to compare asset classes, eg residential RE and shares. We need shelter, how as an asset class it can serve the greater community efficiently and effective to create a high standard of living is difficult to derive a single and correct answer.

Property will always go up over a period of time for all the facts that you, Beej have pointed out over many post, how much it goes up, how quickly, why and to what benefit it serves greater society is up for debate.

Good evening.

 

[MACCA350]

can buy your own place for $200 p/w.......... darn good value.

I think that's pushing it a tad.
Working on a $200k loan with Westpac's Variable rate of 5.81% you'll be paying $270pw for 30 years to own it..........what's the chances you'll have these once in a lifetime loan rates for the 30 years......

If you look at the historical interest rates below, the average over the last 30 years looks to be around 10-11%..........if you work it on 10% over 30 years the repayments are $380pw

Link


So if someone is only counting on paying $200pw for the life of the loan, I'd say steer clear because they're almost guaranteed to be repossessed before the end of the loan term

cheers

 

[kincella]

Macca...no one I know took 30 years to pay off a home loan....you start off small easy repayments, lock it in for as long as you can...concentrate on your career and job, within a couple of years you earn more and pay off the loan faster...then within no time...the loan repayments mean very little compared to your earnings...

some have a losing mentality and nothing will save them...

most are not like that...

I have a friend, she inherited the investment property, she has had the same tenant in for 20-30 years, when that tenant leaves..(probably at death) she will sell the house.....
why ??? she cannot be bothered dealing with an agent....hello....all the agent has ever done is posted her a cheque each month....
her mother brought the property in the 60's..cost about $5000...its worth a million today....she left it to the daughter.....
the daughter thought that was hard work ?????
she will put the money into the bank...to earn ??? 2-4%
how stupid some people really are....
oh and the friend inherited the million dollar family home from the spouse, cashed that one in, put the money in the bank, inherited the Toorak home of her mother and the house in Sth Yarra....she
has never actually bought a property in her life.... she does not like bricks and mortar as an investment....hello there...she prefers cash....
she was lucky she locked in a term deposit at 8.5% (on my advice)
has about 30 years of retirment left, and only a million dollars in cash,...
things looking really glum for her next year...how to live on 30,000 instead of 85,000.when the term deposit expires...
she might be looking for a wealthy man to look after her.....

 

[kincella]

Auction clearance rates above 80%
Its the interest rates kicking in, and probably people have become immune to the bad news....they have been waiting for the opportunity and here it is..
extract follows.......

The news came as Melbourne's auction clearance rate surged this week to its highest level since the end of the 2007 property boom.

The Real Estate Institute of Victoria said that 82 per cent of the 434 properties up for auction sold, an increase of six percentage points in just one week.

It's the first time since December 2007 that the clearance rate has risen above 80 per cent on a non-holiday weekend, when stocks are unusually low. At the same time last year, just 64 per cent of properties sold.

http://www.theage.com.au/national/house-sales-surge-on-back-of-grants-20090516-b6sw.html

 

[kincella]

Oh no, this cannot be happening...or can it ?
sounds more like the news in 2004.....rather than 2009.......
I have to wonder how many more stories like this are out there...but not reported.....is it an exception rathere than the rule......we have had endless bad news about property...from the media....no wonder those on the ground have a different perspective.....

extract..................
Beer-budget 'burbs reaping champagne proeprty gains.....heheheh note the spelling error

Artist Ian McFarland said he sold his two-bedroom cottage in Ethelton, about 5km from Ottoway, for $361,000 recently to a first-home buyer. He received $121,000 more than he paid 2 1/2 years ago.

"We could have made another $10,000 if we sat on the property for three to four months," McFarland said. "With two dogs and a baby, two inspections were enough. We got three offers on the second open inspection and we took the best one."

He said he spent $4000 renovating the property.

and this ..........

Paul Reynolds recently sold his house in Caboolture, 36km north of Brisbane, to a first-home buyer for $345,000 after he purchased the house in 2002 for $110,000.

When asked if he thought he would make that sort of money on the property, he said "Gosh no".

"I never expected it to go up threefold."

The house originally had three bedrooms, but as part of his $50,000 renovations Mr Reynolds added a bedroom.

http://www.theaustralian.news.com.au/business/story/0,28124,25490659-25658,00.html

 

[robots]

hello,

morning Kincella, amazing news 80% clearance rate, WOW just cant believe it

what a country

thankyou
robots

 

[kincella]

I know, I know,...but low numbers only mid 400 available....

I am supposed to be catching up on work today....think I had better take the dog over to the 'million paws walk' today,at Albert Park... let her socialise a bit, and support the RSPCA...maybe some brunch at the kiosk, then back home to work...
ps I note the RSPCA has pet insurance now...must look into that....her eye is still not 100% after the accident with 'Plucka Duck" but it seems to be improving....
cheers

 

[aleckara]

1) Yes, in fact higher house prices do improve baseline standard of shelter for all. As the standard of the typical/average house improves, so does that of the basic ones. Eg public housing tenants today would still demand/expect a standard of housing far higher than what they would have got in the past - as the bar has been raised significantly over the past few decades. Properties that today might be sold as a "renovate or detonate" special in era's gone by might have been typical/perfectly acceptable as places to live in as they are/were. Also consider why in AU we don't live in thatch huts or shanty towns like in much of Africa? I bet houses are cheap over there?

I disagree. Houses are only expensive as the amount of credit available to them to purchase them Beej. Nothing to do with the cost of building or the standard of living - rather their is a shortage of lower priced housing in the first home buyer segment. In a shortage the price has nothing to do with the cost, just how much people have to pay to secure a property (and I mean where they are just at the breaking point). So I think your argument is weak here. An article recently compared houses across the world for around $300k from a Sydney prespective and they showed a rundown fibro shack for this price compared to some really nice properties elsewhere (London, France). Nothing to do with quality of the property.

High prices for anything isn't a good thing. Do you want more money but what you can buy with it to be worth less to compensate, or do you want your money to buy you more? If it was food everyone would be screaming. And to new entrants in the market property is a basic human need that hasn't been secured and just keeps rising.

Peoples weath does not increase when their house price goes up - they still have the same assets. The value of money is going down instead. The only reason why this is profitable is because debt's value erodes with inflation, not the house is accumulating value. Money's value is only measured against the assets it backs. But wages haven't been rising to compensate for housing. So in other words if this rate of growth keeps up my children will never own a home - they may be paid the same amount of money but their money will be worth nothing.

The only difference between you Beej and some others is you secured a property earlier when money was worth more and your wage in terms of housing was worth more - and you are hedged against this erosion in value.

Like the first post on this thread says Australia will become a nation of have and have-nots in housing and this effect will grow to include hard working people over time. You think this is a good thing? Now I totally understand where you are coming from.

 

[satanoperca]

Kincella,

You seemed to have missed the first part of that Age report.

"FIRST home buyers are continuing to pile into the housing market in the race to take advantage of the Federal Government's first home owners grant boost, despite clouds of gloom hanging over the economy and rising prices in Melbourne's most affordable suburbs."

Sounds like even the reporter is shocked, keep building the bubble, bring forward that demand, we are different to US, we can build a bigger bubble.

and

"Figures from the Bureau of Statistics show that first home buyers made up 27.3 per cent of home loans for owner occupiers in March ”” a record proportion"

Nothing to be concerned about, rising unemployment, an inept government placing all Australians in debt and record low IR's.

and

"The figures, from Residex, show that 57 per cent of suburbs with average house values below $350,000 experienced a price increase of more than $7000."

Government sponsored assistance to an asset class that only ever goes up in price. Taxpayers dollars well spent when facing a increasing world wide economic contraction.

aleckara, precisely. High RE prices does not provide for a productive or happy society.

If Oz is so different to the rest of the developed nationa, why is our government going into so much debt, I believed all those who said it is different here but is seems that it is not.