House prices to keep rising for years

[kincella]

aleckara wrote
"The poor young people with average wages in our capital cities I would argue have lost out greatly even if they get into the market now - poor people weren't born earlier. Until wages catch up and there is pressure on this front prices will stagnate at the level of affordability the marginal buyer can afford. If immigration and foreign money props prices higher and locals can't afford housing in their own country I don't see this as a good thing."

but there are heaps of affordable housing even in the cities.....its just not right smack in the middle of the city....although there is a stack of cheap houses for the uni students....

and prices will not stagnate at all....because there are plenty of average people who can afford the houses....and then there are the wealthy people, who can afford a lot more...

people immigrate to australia because its just so much more of a comfortable style of living then where they came from

people are migrating from regional and country areas to the cities....the govts do not provide incentives for people to move away from the city....
the situation will only get worse...with everyone wanting to live in the bigger cities...no one wants to move to a suburb, or country area...where housing is cheaper....

 

[aleckara]

but there are heaps of affordable housing even in the cities.....its just not right smack in the middle of the city....although there is a stack of cheap houses for the uni students....

and prices will not stagnate at all....because there are plenty of average people who can afford the houses....and then there are the wealthy people, who can afford a lot more...

people immigrate to australia because its just so much more of a comfortable style of living then where they came from

people are migrating from regional and country areas to the cities....the govts do not provide incentives for people to move away from the city....
the situation will only get worse...with everyone wanting to live in the bigger cities...no one wants to move to a suburb, or country area...where housing is cheaper....

It probably is more affordable out there. The question is of course is about where the jobs are. For a lot of people the jobs are not in country areas, just more people needing to come in. Many country towns run on mining, tourism or manufacturing which are not stable industries.

As a country we haven't planned our cities to allow for more people - a good thing for people that have property in these areas already and bad from a city planning argument.

Student accomodation is great and all if your a student. But Australians in the past almost had a right to land, not just a unit at the same price as a house in real terms in a previous generation. I do think house prices will go up, just like everything else and I think wages will lag behind for some time. While I agree with you that houses will probably go up no one has managed to convince me that's a good thing. If all we have is an economy based on building more and more homes that seems wrong to me. Homes use up land resources, what's happens when the land runs out, water degrades in our major cities, more resoruces are used (inc land) all for the sake of keeping up with increasing immigration to prop prices further? it seems silly to me and a sure fire way for the average Australian's living standard to decrease over time.

Btw try Sydney. Out west unless you are willing to put up with a fear of your life or a lot of crime even way out west you expect to pay over $400000 for a decent house.

 

[kincella]

just a reminder, with our on going debates....although substantially reduced in light of the real facts...
ps I think some of those crystal balls which have been used by some, should be thrown out and replaced, they are obviously broken, flawed....gave the wrong readings....maybe they should use tea leaves for future readings....

have a look at what the market above 1 mill is doing in Melb....and this is just one group of buyers advocates views....
this week they were looking at the price per square foot...for land sales...

an extract...................
By moko | September 7, 2009


The top end is another country. In some places, it’s another planet.

$722/sq ft in Toorak? Would you like a Brooklyn Bridge with that?

But it happened.

10 Irving Road sold for $3,575,000 – and it’s on the wrong side of the street.

When this year left harbour, no-one would have expected to see even $600/sq ft.

Hitch a ride down the road to Armadale. Two land-value sales:

15 Adelaide Street, $370/sq ft.
60 Adelaide Street (wrong side again), $345/sq ft.
(All of which makes a purchase we made not long ago in Toorak – $300/ft – look remarkably sound.)

Why is this so? Why the stratospheric numbers?

Lack of choice. This week, for example, with some exceptions in Bayside, there’s nowhere you would want to call home up for auction at the top end.

Off-market? Yes. But at prices intended to make you reel and that we are not advising people to pay. At the top end, fear has left the field and the greed is rampant.

Step down a rung and there’s a little more sense:


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

 

[wayneL]

Kincella,

It's raining cash. Under the circumstances there is no surprise.

We just don't know the ultimate cost yet. But you'll probably be dead when it's time to pay the piper.

 

[Knobby22]

Kincella,

It's raining cash. Under the circumstances there is no surprise.

We just don't know the ultimate cost yet. But you'll probably be dead when it's time to pay the piper.

Wayne didn't explain Kincella, but that's because you have been nominated first up against the wall when the revolution comes!:nunchux:

 

[kincella]

first up against the wall...when the revolution comes......ok..bring it on....

I will have made a stack of money by then, provided homes for several families...ie community service....and funded my own retirement...saving you taxpayers from having to pay me a pension....
unlike the thousands who twist their incomes around, so they can get a slice of the measerly old pension pie....
I have a good consience about what I have been doing....I have not been fleecing anyone etc....
oh and the kids are looking forward to taking it all off my hands at some stage...and will probably destroy it all, waste it within a short time..

plenty left for everyone....if they could only think outside the square...they live in
cheers

 

[wayneL]

Community service? ROTFLMAO!

Supplying a service/product for reward is not community service my friend. Not when you will willingly charge the maximum the market will bear. That's capitalism.

Nothing wrong with it either, just don't kid yourself.

 

[kincella]

wayne...you have no idea...who said I charge the maximum the market will bear ???? in fact the rents have not been raised for several years...good tenants etc...
and when selling a house...its the buyers that make the offers....up to me to accept or decline...would you sell a house for 100k if the market was 180k with several willing buyers prepared to pay 180K ????
what would you do in the same circumstances ???

 

[MrBurns]

Geez kincella, are you a director at Australand or something ???, this thread would be half the size if you weren't in here 24/7

The stage is set for a pull back, FHBG boost will go, interest rates on the way up, the only thing that will inflate this bubble further is if Rudd can smell an election, he will mortgage this country to the hilt to get back in.

Wish people here had the same attitude as those in the US - we're just a lazy bunch of bludgers compared to this lot.

It's not just the health care reform it's the spending they're protesting about.

http://www.mailonsunday.co.uk/news/...-Obamas-spending-tea-party-demonstration.html

 

[wayneL]

...
and when selling a house...its the buyers that make the offers....up to me to accept or decline...would you sell a house for 100k if the market was 180k with several willing buyers prepared to pay 180K ????
what would you do in the same circumstances ???

LOL.... AHAHAHA....(gasp)AHAHHAHAHAHAHAHA!

Of course I would! Didn't I say:

That's capitalism.

Nothing wrong with it either, just don't kid yourself.

I don't know what you don't think I have an idea about, but I might just have more of one than you think.

But for you it's more about cheerleading it seems. Example - the puerile Steve Keen post above.

 

[nunthewiser]

The Australian dream of home ownership is slipping away, leaving a threat of a US-style collapse in house prices, according to a team of university researchers.

Analysis by researchers from South Australia's Flinders University has revealed home ownership in the 10 years from 1996 rose only 0.8 per cent despite strong economic growth and low interest rates in that period.

The Flinders Institute for Housing, Urban and Regional Research analysis found home ownership fell by 15 per cent over the two decades to 2006 for low income earners over 45 years of age and medium-high income earners under 45 years.

Other findings included large gains in national income from the resources boom were "wasted" by increasing house prices and accumulating debt to unreasonable levels.

The analysis found the first home owners scheme boosted home purchases for people under 25 years of age but many lower income earners in the 25-44 age bracket were unlikely to ever own their own homes because their parents were spending their inheritances and prices remained high.

Dr Joe Flood, the institute's adjunct professor, said the "the writing is on the wall for the 'Australian dream'."

"The country that promised limitless land, cheap housing and near universal home ownership to all comers now has the most expensive housing in the world amid very tight housing and land markets and little prospect of restoring the balance," Dr Flood said in a statement on Monday.

"As long as the government, the public and the media remain in denial, and self-congratulatory rhetoric continues that Australia has cleverly avoided the housing market correction it needed to have, there is little chance that matters will improve.

"The only ways that this would happen are through a US-style price collapse or a complete re-evaluation of the situation and a coordinated effort by governments, planning and financial institutions to restore the balance between housing supply and demand - or tax away the imbalance - so that all Australians may benefit."

Dr Flood and his team assessed Census data to conclude that Australia's housing market is in "a very dangerous and unstable situation which has received little adverse attention".

The researchers found that after 1996, average house prices increased by three times on average - to around 6.8 times medium household income - and debt levels surged.

"On the one hand Australia is vulnerable to a collapse like the United States, where prices fell by a half during the sub-prime collapse ... or to a long slow decline as in Japan since 1988," Dr Flood said.

http://au.news.yahoo.com/thewest/bu...31789/home-ownership-dream-ebbing-away-study/

sunshine and lollipops ?

 

[gfresh]

"As long as the government, the public and the media remain in denial, and self-congratulatory rhetoric continues that Australia has cleverly avoided the housing market correction it needed to have, there is little chance that matters will improve.[/b]

"The only ways that this would happen are through a US-style price collapse or a complete re-evaluation of the situation and a coordinated effort by governments, planning and financial institutions to restore the balance between housing supply and demand - or tax away the imbalance - so that all Australians may benefit."

Don't you hate these annoying professor types, researching things, coming up with independent conclusions and things, putting forward a contrasting opinion.. damn them, damn them to hell!

I think there could be a risk when the baby boomers start rolling over, that the money that has been coming into the market as they have been reaching their peak earning age taper off.. at the moment the latest craze is the SMSF into property investment, but that is more prevalent amongst those who are approaching retirement soon. When they want their nest egg as cash they have to sell, unless they are positively geared for passive rental income. With our ****ty yields here in Aus, that's not so likely.

 

[Mofra]

When they want their nest egg as cash they have to sell, unless they are positively geared for passive rental income. With our ****ty yields here in Aus, that's not so likely.

Nup, they don't want to move out of the principal residence either so they take out a reverse equity loan so they can enjoy a cash boost without having to move.

Only downside is the lack on inheritance left, but I don't think baby boomers have a problem with looking after numero uno first anyway.

 

[Taltan]

Mofra I think Gfresh is reffering to their rental properties. Once the boomers retire and their marginal tax rate goes to 15% they will no longer have the tax need to be property speculators. Hence they will sell. It is the investment properties that are leveraged not the PPRs

 

[Beej]

Mofra I think Gfresh is reffering to their rental properties. Once the boomers retire and their marginal tax rate goes to 15% they will no longer have the tax need to be property speculators. Hence they will sell. It is the investment properties that are leveraged not the PPRs

BUT, if they own these properties through their SMSFs, then there will be no leverage (you are not allowed to borrow money to buy property through the super fund), so therefore the lower tax rate becomes an advantage, not a problem. A nice steady and growing yield of 5%+ from an IP or 2 is a nice thing to have in your SMSF when you retire - you use the income to live, the income goes up over time (without further capital investment), and the asset appreciates over time as well.

So in this scenario, I see no reason why all the SMSF owning BB retiree's would exit the property market - maybe the opposite will be the case? When you need to rely on your investment income to live, property provides more stability/certainty year to year than equities, but probably in the current context has less capital growth potential (with some exceptions for those very good at buying in the right location at the right time). Personally if I was in this situation (I'm not as still 20-25 years away from official retirement age) I'd be looking for a bit of both?

Cheers,

Beej

 

[moXJO]

Hey Beej
What’s your opinion on the possibility of a construction boom heading our way?

 

[trainspotter]

Western Australia is looking good due to Gorgon Gas.

http://au.news.yahoo.com/thewest/business/a/-/wa/6033854/gorgon-to-trigger-new-boom/

Western Australia is looking good due to Oajagee.

http://www.mwdc.wa.gov.au/News.aspx?NewsID=22

Western Australia is looking good due to Perth to Bunbury Freeway nearing completion.

http://en.wikipedia.org/wiki/Kwinana_Freeway

Yeppers I think there might be a smal construction boom on the way ? IN CERTAIN AREAS

 

[kincella]

watched a show last night... Boddington in WA....intended to look up on the net today....huge growth...huge potential....

as for the boomers, I have a portfolio of props, I have no intention of selling any...in fact I will be adding more...the props are the cash cows for my retirement....and the SMFS can get stuffed...too much red tape and harrassment from the ato there...just as easy to neg gear them now...not in a smfs...and pay the higher tax....leave it all there in retirement....pffftt to the lower tax
..............
I have cash and stocks...but most is in the property.....I know property, and can buy and locate good properties...all for my retirement....oh its not just the return...capital growth is excellent....
my boomer friends have the same attitude....oh and the other important thing is....we are the managers, have total control....which is better than other forms..where one is reliant on other managers....who can stuff up.
cheers
**for growth...in the near future....have a look at Euroa in Vic....a famous Racehorse Breeder and Racing group are relocating to there from the Barossa Valley in SA....soon...kidding that move will not invigorate that small town.....it will bring huge numbers of racing people and tourists up there....about 1.5 hours from Melbourne...on the main Sydney to Melb route...
oh and more jobs in town...and the drought breaking.....buy for under 300k

 

[gav]

kincella, just a quick question...

Let's say the govt decided to get rid of negative gearing as it is costing almost $12 billion per year (when the ppl claiming it aren't even earning half that figure). The govt decides that the money would be better spent reducing our nations debt. How would this affect your property portfolio?

 

[Beej]

Hey Beej
What’s your opinion on the possibility of a construction boom heading our way?

Hard to say? Alan Kohler had a graph on ABC news tonight showing that across Australia residential construction is currently way down in historical terms, and in NSW we haven't built fewer new homes as this year since 1954?????

It seems that logically we should be building far more, but somehow the crap state government policies (which push up base costs for developers) + the perceived risk (ie not enough upside reward/profit potential currently in the eyes of many developers, plus difficulty securing funding etc), seems to be keeping activity subdued. I tend agree with many here that the FHB grant boost should have been for new houses/flats only - perhaps something like that is on the horizon when the boost ends?

Cheers,

Beej