House prices to keep rising for years

[satanoperca]

Thanks Beej, that is what I intended, a new bet, keeps things interesting.

Yes Robots, you will collect as I am looking forward to meeting the man behind the Robot.

Cheers

 

[robots]

hello,

look look:

http://news.theage.com.au/breaking-...ck-up-further-in-july-govt-20090810-efhz.html

its even going off its head in China, amazing

well done, this is fantastic

thankyou
professor robots

 

[kincella]

this one is for the bears.............some food for thought

if only some could get their hands on those spare bedrooms, there are enough spare bedrooms to look after the population growth for the next 20 years.....sigh and some have two spare rooms....love these reports...so if we all give up our spare rooms, and share them with some strangers then everything will be Ok.......
I wonder why we have spare rooms, are we stupid, did we buy a 3 bedder when we only needed two....or could it be we like having a spare room or two.....
well I love my spare rooms, and they are filled with...whatever I choose...and no way am I going to let a stranger in to share my spare rooms....and I doubt anyone will either...in fact up until 2006 (love the relevant dates, takes them 3 years to tell us news)the people choosing a bigger house with 2 spare rooms, and less people per house has been increasing at an (alarming) ...double the rate....ok so the alarm is for the bedrooms....hehehehehe

Room to spare as city sprawlsAugust 11, 2009
A THIRD of Melbourne bedrooms are now unoccupied, according to a state department report.

As the Government extends the city's urban growth boundary by thousands of hectares, a Transport Department report showed there were already 1.3 million spare bedrooms in existing suburbs, enough to accommodate projected population growth during the next 20 years.

Almost 70 per cent of houses within current city limits had extra bedrooms, with the highest proportion in the wealthy eastern and bayside suburbs, and in outer growth suburbs where the blocks are comparatively larger.

The report showed increased wealth had led to homes being built larger than ever, with the number of households having two or more spare bedrooms in the decade to the 2006 census more than doubling. At the same time, the number of people per household had shrunk.

http://www.theage.com.au/national/room-to-spare-as-city-sprawls-20090810-efl6.html

 

[gav]

LOL kincella, an 'interesting' article...

Well I have 2 spare bedrooms, doubt anyone would want to sleep in them though - full of old Army gear, my smelly gym gear and my computer. No way I'd rent it out to strangers, I won't even let family live with me!

 

[Uncle Festivus]

Flip of a coin :

Heads - housing led recovery
Tails - housing led recession

The coin is still in the air.

I still can't see the point in subsidising existing housing, making them even more unaffordable/expensive - the only way housing is going to lead a recovery if they build new dwellings? Perhaps some of the permabulls can explain it a bit better?

hello,

look look:

http://news.theage.com.au/breaking-...ck-up-further-in-july-govt-20090810-efhz.html

its even going off its head in China, amazing

well done, this is fantastic

thankyou
professor robots

It's called an out of control stimulis bubble - should be spectacular to watch it burst

 

[gfresh]

and no way am I going to let a stranger in to share my spare rooms....and I doubt anyone will either

I would..

 

[Mc Gusto]

It's called an out of control stimulis bubble - should be spectacular to watch it burst

agreed

 

[trainspotter]

Wait until this guy comes out to play. Won't be too far away now kiddies. Interest rates are rising as we speak, just call your local CBA. "The days of the 0.25 per cent movement look to be over," Mr Kolenda said. "When the RBA moves again they will probably do so decisively with increases from 0.50 per cent and 1.0 per cent."

http://www.news.com.au/business/money/story/0,28323,25908717-5016110,00.html

 

[MrBurns]

Wait until this guy comes out to play. Won't be too far away now kiddies. Interest rates are rising as we speak, just call your local CBA. "The days of the 0.25 per cent movement look to be over," Mr Kolenda said. "When the RBA moves again they will probably do so decisively with increases from 0.50 per cent and 1.0 per cent."

How sweet it is.......... I think we should only have quotes from this guy in future no more from the housing permabull tossers.

 

[Mofra]

How sweet it is.......... I think we should only have quotes from this guy in future no more from the housing permabull tossers.

Wow, that lack of housing crash seems to really be stinging

 

[Mofra]

I still can't see the point in subsidising existing housing, making them even more unaffordable/expensive - the only way housing is going to lead a recovery if they build new dwellings? Perhaps some of the permabulls can explain it a bit better?

If you're looking for sound economic reasoning, you're out of luck. It's all about votes; as often said in confidence by politicians "rising house prices make for happy voters".

I tend to be results dirven so I tend to care a little less about the journey than most. If the gummint instead decided to fund emus instead of housing I'd be covered in feathers right now.

 

[MrBurns]

Wow, that lack of housing crash seems to really be stinging

I was just a little inspired by those comments

 

[kincella]

just to give some of you an example of how to become a millionaire....
you need to find a good mentor....heres some clues

THERE'S no doubt property development is a big, lucrative business.

You only have to scan the rich lists from around the world to see the number of multi-billionaires who made their fortunes from property.

Australia is no exception, and many of our wealthiest people made their first million dollars using property.

So where does a budding property developer start?

And budding doesn’t necessarily mean young.

More older Australians are expected to turn to property development and renovation following the recent cut to superannuation deposit limits.

According to the Australian Institute of Architects advice service, Archicentre, cutting the maximum $100,000 super contribution limit to $50,000 is likely to result in a surge in renovation and development activity by baby boomers.

http://www.news.com.au/business/money/story/0,28323,25907417-5013951,00.html

 

[Taltan]

If you're looking for sound economic reasoning, you're out of luck. It's all about votes; as often said in confidence by politicians "rising house prices make for happy voters".

I tend to be results dirven so I tend to care a little less about the journey than most. If the gummint instead decided to fund emus instead of housing I'd be covered in feathers right now.

I agree but there are limits, don't you think US, UK, NZ & European politicians also wanted to win elections?

 

[MrBurns]

From Crikey, a bit of common sense -

Everything's distorted from inside this housing bubble
Adam Schwab writes:

We may sound a little like a broken record on Australia’s residential housing market. Based on metrics like disposable income-median property price or relative debt levels, Australian house prices appear extraordinarily expensive. Housing price data is thumbing its nose at our claims, continuing to rise (significantly in the most recent quarter), even as GDP remains stagnant or falls and unemployment edges higher.

Data released by the ABS earlier this week indicated that financing commitments for owner-occupied and investor housing grew by a further 1.8% in June (0.3% on a seasonally adjusted basis).

There have been many ‘reasonable’ explanations provided for ever increasing residential property prices (the median house price in Sydney is now $547,000 -- almost ten times median income levels). Most common is the ‘supply’ argument: that hundreds of thousands of people are moving to Australia and they need to live somewhere. Or that Australia is a highly urbanized country and this vindicates a median house price which is more than double that of the United States.

Those reasons appear to make sense. But then again, during a bubble lots of things appear to make sense which in hindsight, are ludicrous. Remember the dot.com boom, when it was commonly thought that business over the internet would take over from bricks and mortar? This meant that at one point the loss-making pets.com was worth more than US$100 million before collapsing into liquation after 268 days.

There are two major causes for the recent residential property bubble -- first, government meddling (specifically through the first owner’s grant, but also bank funding guarantees). This is providing house buyers with more cash (which is then leveraged up substantially) to purchase their dream home.

The second reason for the bubble is the Big Four banks’ continued willingness to lend money to home buyers on exceedingly generous terms, upwards of 90 percent loan-to-valuation ratios. If banks took a more prudent approach and cut LVRs to say 70 percent, we would witness a rapid, almighty slump in property prices (most notably at the lower end). Banks of course don’t want this, the collateral (security) underpinning the loans they have already made are other houses. Banks don’t usually like to destroy the value of their collateral -- it isn’t good for business (or more pertinently, for bankers’ salaries).

The supply argument is not actually incorrect. Supply issues are clearly having a short-run effect on prices. However, eventually (and it may take years for these structural changes to transpire) the supply curve will adjust. If property prices become too expensive, immigrants will opt to relocate to other countries, where the cost of living is more bearable. People will also move further away from expensive cities. Japan is a far more urbanized country than Australia yet since 1991 Japanese city property prices have suffered a remarkable downturn, falling for 15 consecutive years.

It took a decade for Japan’s property boom to finally burst but eventually, supply readjusted and prices plummeted, even in Tokyo, which has a population of more than twelve million but is far smaller in geographical size to Melbourne which has a population of less than four million.

The slow moving supply curve was well explained by Nobel prize winning economist, Robert Shiller in The New York Times recently when he noted:

Several factors can explain the snail-like behavior of the real estate market. An important one is that sales of existing homes are mainly by people who are planning to buy other homes. So even if sellers think that home prices are in decline, most have no reason to hurry because they are not really leaving the market.

Furthermore, few homeowners consider exiting the housing market for purely speculative reasons. First, many owners don’t have a speculator’s sense of urgency. And they don’t like shifting from being owners to renters, a process entailing lifestyle changes that can take years to effect.

Among couples sharing a house, for example, any decision to sell and switch to a rental requires the assent of both partners. Even growing children, who may resent being shifted to another school district and placed in a rental apartment, are likely to have some veto power.

Business Spectator and Crikey contributor, Chris Joye, was correct last week when he noted residential property isn’t the only asset bubble -- witness the dramatic collapse in commercial property prices in Australia (and rapidly increasing vacancy rates) or sharp loss in equity values last year.

However, simply because there are other asset price bubbles which are more obvious and more reactive to economic conditions doesn’t mean that the price of much of Australia’s urban residential property has not far exceeded its intrinsic value.

As long as Australia’s banks have an interest in propping up residential property, the bubble will be tentatively kept alive. However, the risks of this path are significant. As Dan Denning in the Daily Reckoning noted presciently yesterday:

The bigger risk ... is that Australia's banks will become increasingly reliant on rising house prices to spur demand for new mortgages. That's the process that contributes to earnings and keeps the balance sheet ticking along. The loans made to mortgagees go on the balance sheet as assets. They are funded from money borrowed abroad, which goes on the balance sheet as a liability.

The trouble here is that assets can change in value while liabilities do not. The debt has to be repaid, even if house prices fall. Australia's banks are gambling with the capital structure of the entire nation, sinking more and more borrowed money into residential housing. It's the biggest and riskiest bet yet.

Yes. Big, risky and very stupid. As no doubt Japanese banks can attest.

 

[knocker]

From Crikey, a bit of common sense -

Not long now before the brown sloppy stuff hits the fan.

 

[MrBurns]

Not long now before the brown sloppy stuff hits the fan.

I think KRudd will prop it up somehow untill he's a long way from an election anyway.

 

[Mofra]

I agree but there are limits, don't you think US, UK, NZ & European politicians also wanted to win elections?

Yes I do, however we clearly have a different market here which the results thus far attest to.

 

[kincella]

some of you guys are on the wrong thread....go back to the losers thread....ahmm...you know the one..... house prices keep falling thread....
and leave this thread to the winners....

 

[MrBurns]

some of you guys are on the wrong thread....go back to the losers thread....ahmm...you know the one..... house prices keep falling thread....
and leave this thread to the winners....

This IS the losers thread, didn't you see the writing on the wall ?