House prices to keep rising for years

[robots]

hello,

thanks burnsie, i think the people you mentioned are just buying a place for the family

thankyou
associate professor robots

 

[MrBurns]

hello,

thanks burnsie, i think the people you mentioned are just buying a place for the family

thankyou
associate professor robots

I think you're right, interest rates are down they need a place to live so there you go, easy.

 

[kincella]

or the asians could be buying the properties due to the relaxation of the FIRB changes....and for students the $300k limit has been removed...

I just read the article about the NAB and muslim friendly loans to be made available for everyone....then for just a moment I thought....wow this could be good for all of us....but the profit sharing bit would need to be scrutinised..

otherwise without the profit sharing ...you lock in a rate for the life of the loan....for eg; the bank buys the property, adds on a profit....and you repay the amount by instalments...but over a 30 year loan...what would the bank assess interest rates at...hmmm...10% plus profit sharing......
no better off the way we are ...
and the funny thing about this....a muslim style loan is not allowed to charge interest....but they allow other interest type charges to be added up front...
no difference...its interest by another name.....or similar to a massive break fee....
hehehehe.....does not sound too smart at all:sheep:

 

[MrBurns]

BIS says house prices could rise 20% in the next few years because of low interest rates and the FHB effect.
Very low interest rates is what caused to price explosion in the first place, if they're right it would be the first time a housing bubble ended in another housing bubble.

 

[Beej]

BIS says house prices could rise 20% in the next few years because of low interest rates and the FHB effect.
Very low interest rates is what caused to price explosion in the first place, if they're right it would be the first time a housing bubble ended in another housing bubble.

I think the problem here is the argument that housing in AU is still (over-all) in a bubble. If it was in a bubble, it inflated during the period from about 1998 through 2004. Since then, particularly in Sydney, prices in real (inflation adjusted) terms have actually fallen quite a bit already; 20% in Sydney in real terms - this is how housing bubbles deflate in a normal situation (like we have here - unlike the abnormal situation in say the US with massive defaults, sub-prime, credit rationing etc). In the meantime rents have continued to rise strongly in both absolute and real terms (as you would expect as a so called housing bubble deflates), and interest rates went through a full rising/falling cycle, with commensurate effects on the housing market. The rising interest rates take the wind out of price rises, and the rising rents put a floor under any price falls.

The market is currently actually relatively cheap, and I don't think it is in a bubble now at all - it is in a consolidation phase (certainly Sydney/Melbourne are), which is why there is the possibility of further strong price rises in a few years time, as the cycle starts over again.

Of course the exact position in the cycle can and does vary from city-city/regions-region. Sydney/Melbourne markets lead the rest of the country. So it may be that Perth/SEQ for example are still in the prices falling in real terms rather than a consolidation phase - but those markets will move soon into the same consolidation phase Sydney/Melbourne are in now.

Cheers,

Beej

 

[robots]

hello,

good evening, my name is Robots and its been another great day,

http://www.morrellandkoren.com.au/topend/

fine commentary from the Buyers Advocates, just amazing, cant believe Kincella

Melbourne what a place on the planet

i know who should be getting down to CentreLink,

anyway, any questions fire away

thankyou
associate professor robots

 

[Trevor_S]

The view that Consumer Confidence correlates with economic outcomes is by no means a new or even controversial idea!

http://business.smh.com.au/business/confidence-takes-another-hit-20090615-c8am.html

The outlook for consumer confidence has dropped to its lowest on record in the 17-year history of a survey.

*The MasterCard Worldwide Index of Consumer Confidence

 

[kincella]

Hi Robots,
sorry I missed your post last night...its exceptional reading...
so I have copied bits...just so the kids did not miss it....

Those not at the coalface could read in Saturday’s Age “Global Crisis Hits Toorak” and come away with a 180 degree view of what was really in store. The article should probably have been headed “Global Crisis Misses Toorak, Last Seen Heading for Perth” – because in these parts, over the weekend clearance rates approached the stratosphere.

If you look only at the residential market, you could conclude that Melbourne is leading the world out of the GFC. The graph is taking on a distinct U-shape, at the top end driven in large part by continuing stock shortages (in that, at least, we see no early respite).

So what’s up? Is it sustainable? Should those property analysts who were predicting 20-40% drops be seeking alternative employment?

Oh, the unpredictables. We can only tell you what we are seeing; and that’s a solid market right through the inner-city, the reappearance of investors and the added spice (following the FIRB’s relaxation of rules) of overseas interest.

At times over the weekend, it felt like we were back in 2007. Multiple bidders, reserves left in frenzied wakes, auctioneers with grins from chequebook to chequebook.

A peak in margin-call driven sales? In mortgagee auctions? There are always some, but today’s levels are nothing out of the ordinary. So there go a few more crises whizzing by.

The litmus test is always land. The result? Land is not going out of fashion.

and this bit at the end

The next two weekends are particularly busy as sellers attempt to fairwell their property prior to the mid-year school holidays. Later listings are are likely to be slim until Spring. Prospective buyers are advised to remain calm.

 

[kincella]

another incentive to keep the builders in jobs....and new home buyers
incentives
NSW moves to kick start housing sectorJune 16, 2009 - 12:54PM
The NSW government is hoping to kick start the state's housing sector by slashing the stamp duty on newly built properties for at least six months.

Under the government's NSW Housing Construction Acceleration Plan, buyers will receive a 50 per cent stamp duty cut on newly built houses capped at $600,000 from July 1 until the end of 2009, with plans to review the measure in 2010.

In his first budget, Treasurer Eric Roozendaal said the plan would provide a $64 million boost for the housing construction industry and put $11,245 back into the pockets of home buyers.

"This measure will benefit anyone buying a new dwelling including empty nesters, families who need more room, and mum and dad investors seeking the security of bricks and mortar," Mr Roozendaal said when delivering the budget in parliament on Tuesday.

The plan will not apply to first home buyers because they already pay no stamp duty on purchases up to $500,000.

The state government will extend its $3,000 first home buyers supplement for newly-constructed homes until June 2010.

http://news.theage.com.au/breaking-...-kick-start-housing-sector-20090616-ceux.html

 

[MrBurns]

From Crikey - note the link to
http://sqmresearch.com.au/
this looks interersting.

also posted this on the house prices to fall thread as it's interesting for both -

BIS Shrapnel property assessment BS
Adam Schwab writes:



Property research company BIS Shrapnel has produced its regular assessment of the prospects for Australia’s residential property market and unsurprisingly, the news from BIS is very positive. The report suggested that Melbourne and Sydney residential property could increase in value by as much as 19% by 2012. Melbourne median house prices are tipped to increase from $425,000 to $507,000, while Sydney medians are forecast to rise from $530,000 to $630,000.

BIS Shrapnel senior project manager, Angie Zigomanis, told media that “we expect rising confidence in the prospects for an economic recovery in 2010, so investors are likely to return in greater numbers, attracted by increased rental returns and low interest rates.”

We are not sure what economic data Ms Zigomanis and BIS have been analyzing, but perhaps they haven’t been keeping too close an eye on the latest moves by Australian banks to raise interest rates in response to increasing wholesale funding costs (and lack of competition). Further, the interest rate yield curve suggests that rates are likely to rise, rather than fall in the coming years (interest rates are currently at historical lows). Meanwhile, the US and UK are undertaking quantitative easing (also known as printing money), in a desperate bid to stave off asset-deflation, potentially leading to inflation and the need for further interest rate rises.

House prices are currently being boosted by the First Home Owner’s Grant, which, coupled with loan-to-valuation ratios of upwards of 90%, has resulted in a boom in the otherwise "affordable sector" of the housing market. (This boom has spilled to the upper-affordable level, as those who sell properties to first home buyers have more to spend on their upgrade).

When the boosted FHOG falls away later this year, if interest rates return to 7-8%, it is a more logical response that house prices will fall in the coming years, rather than rise. While auction clearance rates have spiked to upwards of 80% in Melbourne (and above 70% in Sydney and Brisbane), this appears to have been a result of panicked buying by first home owners, as evidenced by lending commitments to the first home sector hitting 28% earlier this year (in 2007, the figure was closer to 10%). The Financial Review noted this morning that the number of first home owner’s grants was up 67.5 percent in April, compared with the corresponding period in 2008.

As for investors re-entering the market, that is dependant on yields and forecast capital growth. Unless unemployment stays at a reasonably low level (it is forecast to rise to above 8%) and interest rates don’t spike, it is difficult to envisage investors re-entering the property sector.

BIS’ most recent report is not the first time that the researcher has been optimistic on the performance of the property sector -- in March 2008, BIS claimed that house prices would rise by 40% within five years (conveniently similar to the average 7.9% annual increase over the past two decades).

One significant yet often unreported problem faced by many home-buyers is a significant information asymmetry. As Crikey has previously noted, unlike publicly traded equities, it is reasonably difficult and expensive for home buyers to obtain detailed information regarding historical price data regarding specific properties. (Larger investors and real estate agents would obtain such information from the likes of RP Data, however, the time and expense often precludes "mum and dad" home buyers from accessing such information).

This problem may be alleviated somewhat through the development of an on-line property information service by SQM Research, a property advisory and forecasting researcher company run by former Australian Property Managers chief, Louis Christopher. SQM’s product (expected to be released shortly) will allow users to determine how long a listed property has been on the market, if the listed price has changed over that period and what the last sale price of the property was (for properties listed from more than 60 days). The "Home Discounts Report" costs $39 per suburb but unfortunately, does not extensively cover Victoria and Western Australia due to privacy requirements.

 

[MrBurns]

another incentive to keep the builders in jobs

I was wondering if this was designed to help the building industry why didnt the grant just apply to new homes ?

 

[Quincy]

NSW moves to kick start housing sector June 16, 2009 - 12:54PM
The NSW government is hoping to kick start the state's housing sector by slashing the stamp duty on newly built properties for at least six months.

The goal posts just keep moving.

 

[Beej]

I was wondering if this was designed to help the building industry why didnt the grant just apply to new homes ?

Which grant? The $3k + the new stamp duty concession do apply to new homes only?

The big change here is that now non-FHBs can get a stamp duty concession (a first for NSW, where FHBs have been stamp duty exempt at < $500k and discounted for < $600k for several years), but only for newly built places as stated. IMO this is a good move for both the economy (building industry), housing supply, and longer term house prices/affordability (due to the increased supply). Notice that this can and does all happen without the need for a "crash" in existing house prices, although clearly some existing demand would shift from the established house market to the newly built one due to incentives like this. I think there is plenty of demand to go around!

Cheers,

Beej

 

[Quincy]

NSW budget slashes stamp duty on new build property

Buyers will save up to $11,245 in stamp duty charges, under the new measure announced in the NSW budget today.

The Housing Industry Association (HIA) welcomed the move as a "much needed boost for the residential building industry".

"The saving in stamp duty provides a window of opportunity for anyone looking to buy a new home, including growing families, second and third home buyers and investors", Graham Wolfe, HIA executive director, said.

Mr Wolfe warned that building delays and schedules could hamper NSW’s plan to lure buyers on to the housing ladder.

http://money.ninemsn.com.au/article.aspx?id=826160

 

[Soft Dough]

http://money.ninemsn.com.au/article.aspx?id=826160

Well congratulations government, you have not only put house prices up $11000, making it more unaffordable for people, you have increased it by what that amount could effectively gear.

Stupid politicians, only in it for votes instead of interest in the economy.

 

[robots]

hello,

buying an established is very good for the economy, a house/unit may get modified 3 or 4x over its life

some more info:

http://www.residex.com.au/newsletter/source2009_06aMC.html

just like to thank the real king: Shadow, for the link

i am getting excited about picking up that slab of Ruskie's from Satan, might fast for a few days for the meal as well, going to be a great photo opportunity when i collect

this is just amazing, has the crash happened yet? we still at 7x average income?

internet back working in the UK yet?

thankyou
associate professor robots

 

[MrBurns]

Which grant? The $3k + the new stamp duty concession do apply to new homes only?

The big change here is that now non-FHBs can get a stamp duty concession (a first for NSW, where FHBs have been stamp duty exempt at < $500k and discounted for < $600k for several years), but only for newly built places as stated. IMO this is a good move for both the economy (building industry), housing supply, and longer term house prices/affordability (due to the increased supply). Notice that this can and does all happen without the need for a "crash" in existing house prices, although clearly some existing demand would shift from the established house market to the newly built one due to incentives like this. I think there is plenty of demand to go around!

Cheers,

Beej

Thanks Beej I dont recall getting a notification of your reply -

I meant any increase in the FHB grant that applies to existing homes does nothing for the building industry, only gathers votes.

 

[robots]

Thanks Beej I dont recall getting a notification of your reply -

I meant any increase in the FHB grant that applies to existing homes does nothing for the building industry, only gathers votes.

hello,

what about when the new owners get in? things soon change

thankyou
associate professor robots

 

[Stan 101]

Thanks Beej I dont recall getting a notification of your reply -

I meant any increase in the FHB grant that applies to existing homes does nothing for the building industry, only gathers votes.

For people to purchase new homes, one needs to sell their existing. But then again, what would BIS Sharapnel know?



Another golden Burns post.

 

[MrBurns]

For people to purchase new homes, one needs to sell their existing. But then again, what would BIS Sharapnel know?

Another golden Burns post.

The whole FHBG boost was justified on the basis of jobs for the building industry, the FHB who who buys an existing home does nothing for employment. and we all know BIS just BS with an I in the middle.