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House prices to keep rising for years

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Cynical...2 decades of low growth ??? ...not in Melbourne......well yes in Melton maybe, not inner suburbs where I live...
 
QLD auction rate is always pretty low.. and auctions are not popular here (thank god).. possibly because once you are successful bidder at auction, contract automatically goes unconditional that day. Scares off FHB.
 
Queensland’s population growth compared to the Australian average
33401.gif


Queensland’s economic growth rate of 3.8 per cent is 35 per cent higher than the Australian average, 40 per cent higher than the Victorian (Melbourne) average, and 71 per cent higher than the New South Wales (Sydney) average -- although that was probably pre-GFC
 
kincella said:
arrived in Melb in 1989...but this report shows a continous growth from 1986 - 2006...its Aus wide....but I dont recall Melbourne being substantially below or behind any other state except Syd..which is always the most expensive

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf
Click to expand...
There are some interesting figures in there Kincella, would be interesting to see them stretch from 06 to 08.

This stood out to me:
June 86 - June 06

Established house prices (which include land) have increased significantly over the last couple of decades. However, project house prices (which exclude land) and the cost of materials used in house building, have experienced increases more in line with the general rate of inflation (Table 2). The implication is that an important component of the increase in established house prices is the higher cost of land.

Consumer price up 104%
Established house prices up 325%
Project homes up 148%
Materials used in building up 91%
Click to expand...

A few things can be seen here

1) The cost to build a house has increased far more than CPI and the cost of materials which would mean the labour charges have increased disproportionately(and explains all the new generation of wealthy developers and tradies).

2) Land has increased ridiculously, which lends credibility to the dismay I have at the governments excessively slow release of land which seems intentionally inflating the price of land...........though I would lay blame on the major developers here also........all of this I have already mentioned.

3) Building materials costs are actually less than the CPI increase, so overall, the land, labour greed of developers and lack of government intervention are where all the excessive increase in cost to current home buyers has gone in the past 20 years.

If the housing market is truly and solely influenced by supply and demand then the root of the excessive increase is squarely placed on the shoulders of the government and it's lack of timely release of land!!!

What a shame for our future generations of first home buyers trying to have that "All Australian Dream"............and shame on the government(all of them) for allowing this to occur under their watch

........it really upsets me this could be allowed to happen..........I have three children and I am embarrassed at the situation we were given and are expected to give them when we hand over the "keys to the city"

cheers
 
MACCA350 said:
If the housing market is truly and solely influenced by supply and demand then the root of the excessive increase is squarely placed on the shoulders of the government and it's lack of timely release of land!!!

cheers
Click to expand...

... what I said earlier ...
We ain't gonna have a crash like we've seen in the UK and US. Things are different down here.
 
Amazing.....Robots you will love these figures.....almost 3 times as many homes were sold privately.....

There were 823 private sales last week, compared with 287 auctions.

Mr Larocca said people were selling privately because of a loss of confidence in the economy and a cooling at the top end of the market.

"The proportion of properties that have made up the marketplace this year have been skewed towards more affordable and middle-end homes, and they are generally more often than not sold at private sale," Mr Larocca said.

"Seventy per cent of the Melbourne market has always been sold at private sale.

"But while the market is resembling the boom times of 2007, when the auction market was very strong, we are seeing a higher number of private sales," Mr Larocca said.

Share this article
http://www.news.com.au/heraldsun/story/0,21985,25737586-661,00.html
 
MACCA350 said:
There are some interesting figures in there Kincella, would be interesting to see them stretch from 06 to 08.

This stood out to me:


A few things can be seen here

1) The cost to build a house has increased far more than CPI and the cost of materials which would mean the labour charges have increased disproportionately(and explains all the new generation of wealthy developers and tradies).

2) Land has increased ridiculously, which lends credibility to the dismay I have at the governments excessively slow release of land which seems intentionally inflating the price of land...........though I would lay blame on the major developers here also........all of this I have already mentioned.

3) Building materials costs are actually less than the CPI increase, so overall, the land, labour greed of developers and lack of government intervention are where all the excessive increase in cost to current home buyers has gone in the past 20 years.

If the housing market is truly and solely influenced by supply and demand then the root of the excessive increase is squarely placed on the shoulders of the government and it's lack of timely release of land!!!

What a shame for our future generations of first home buyers trying to have that "All Australian Dream"............and shame on the government(all of them) for allowing this to occur under their watch

........it really upsets me this could be allowed to happen..........I have three children and I am embarrassed at the situation we were given and are expected to give them when we hand over the "keys to the city"

cheers
Click to expand...

Macca - you are correct that the MAJOR issue (in the big cities at least) has been the slow rate of new land release, plus also the high levies placed on developers for establishment of all the services needed for new land release (you have not mentioned that factor in your post). That adds significant cost which get's passed straight onto prices (as long as there is demand at those price levels - which there seems to be).

Re tradie wages - over the last 10 years ALL wages have gone up at a rate faster than CPI. We have been in a high growth, skills and infrastructure lacking period, causing strong wages growth well beyond CPI. So given that most of the trades involved in building are considered to be skilled (by definition), of course their wages will have increased above inflation in the past 10 years. In fact, this is the outcome EXPECTED in a strong economic growth environment - if wages only tracked CPI why would we even bother with productivity improvement and economic growth? productivity growth will bring the cost of materials down, but wages up (in real terms).

Other factors to consider - how much bigger have houses got on average over the periods you are comparing? It may be that materials have actually got a lot cheaper, but more of them are used per house, plus the amount of labour to build has also increased - so all of that labour cost may not be just due to higher wages for tradies.....

Cheers,

Beej
 
spot on again Beej , as usual....houses are probably 1.5 times larger than the traditional size of 30 years ago...some probably twice the size....you know, like the mcmansions....
when I was looking out near Wantirna in the early 90's...all the display homes were close by...they were all 2 story, 4-5 bedrooms and 2 bathrooms, double garage etc...
when I was looking in the early 80's Jennings had homes in NE Vic beautiful big entertaining areas...but the rest of the house was with smaller bedrooms, they were about 120k's, same home today in Sydney for about 350-390, but other builders near Melb now 2009 about 240-280 k's
as you correctly point out, building materials are cheaper, but they are building bigger houses, and requires more labour....

btw I was looking for a graph to compare property to shares over past 20 or so years....
what I found was mainly companies who wanted lure investors into either shares or super...with a comparison of 10k invested over 20 years in shares produced a return of say 12%, with the property graph they showed 4k's invested over only 15 years returned half that.....are people really so stupid to believe that.....
in the real world they are likely to invest more in direct property than shares...recent figures suggested the average share investor put up 100k's into shares while sitting on property worth about 400k's
another graph had the same amount invested in each, but share graph was over 20 years, property graph over 10 years.....skewed periods to show shares outperformed property......
grrrrrrrrrrrrrrrrr
 
So_Cynical said:
:rolleyes:

kincella

Perth and Adelaide are a disaster, i fail to see how anyone could see it any other
way....The Melb results certainly read very well...perhaps it was the 2 decades of
low growth, and the state is now just playing catch up.
Click to expand...


Most of the recent chat on this thread has been re Melbourne, which is undergoing strong population growth.

happy to stand corrected on this, but my impression is the entire east coast, and regionals, from Sth NSW to Nth Qld is very flat, except Sydney and Brisbane.
 
awg....I think you are right...I have been talking about Melb only, and Beej watches Sydney, I think Perth is having problems, and am not sure about Brisbane...thought it was overheated though
 
Good point there, I didn't take into account the size of houses being built.
This indicates that average house size has increased about 37% over the last 19 years to 03', they mention that the last 2 years of those figured showed reduction in size!.....This does not fully explain the disparity between material and build cost.........I'd like to see a graph covering up to 08' though as I think the following point will have had an impact on house size also.

This article indicates that land size over the previous 10 years to 03' has reduced by about 8%.........in Melb this reduction has been over 20%..........I'd say even more reduction has taken place since 03'.

Talk about getting less for more

cheers
 
First house bought 1987. 863m2 block and 110m2 3 x 1 house. $20,000 for block and $50,000 for house. Industry standard

Last house bought 2006. 612m2 block and 218m2 4 x 2 house. $150,000 for block and $256,000 for house. Industry standard.

How the times have changed. Young adults buying property want the biggest and the best. NO 3 x 1 for them.
 
Macca...somewhere in my hundreds of posts on this subject over 2 sites I have covered the costs.....but did not add the research notes to my fav's folder...
you do the research....check out the amount of cement used per house today ...I think it is double the amount of the old homes, and double or triple the price,.....think BHP and steel, again there is a large amount used compared to the old days....and you know where steel prices have gone past 10 years.....any copper in the house ...of course there is
the fittings are not cheaper than 30 years ago....ie bathroom, kitchen etc
add airconditioning (not air in the old houses)
the main cost is the price of land.......with local govt and state govt charges increased a hundred fold ....its about 25-30,000 k's for the new blocks in the outer suburbs
 
kincella said:
the main cost is the price of land.......with local govt and state govt charges increased a hundred fold ....its about 25-30,000 k's for the new blocks in the outer suburbs
Click to expand...
Don't know about that, Govt charges for our $220k 800m2 block in Melb outer suburb are just over 7k. I'd say the average smaller blocks in the area are cheaper still.

cheers
 
.....and a fast train there within 5 years....lucky buggers...
oh and these houses are probably about 200k's...not 500 k's
extracts only
Mr Zhang, who migrated from China in 2000, said while the grants helped, owning a property rather than renting was the couple's main incentive. "In China we couldn't buy a house with big land like Australia," he said.

"Impossible. Even an apartment would be hard. Here it's different, we've got a good house

The State Government's $4 billion regional rail link from Werribee to the city, due to be completed by about 2014, will include stops at the boom suburbs of Tarneit and Wyndham Vale.

http://business.theage.com.au/busin...o-take-tarneit-for-granted-20090705-d97b.html
 
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