House prices to keep rising for years

[kincella]

I copied this post....it was posted on another forum today....again the rises are in the inner suburbs...you will not see gains like that out in the cheaper areas....there is something for everyone
...............................................................................................

While the clowns who've been predicting (wishing) for 40% price drops in house prices in Australia over the last 12 months, my 3 IPs have EACH piled on an average of around $90,000 in value in the same time period, according to recent valuations. All are located in the Brunswick/Coburg areas in Melbourne. Being the sceptical person I am, I wanted to see proof for myself. I attended 2 auctions, both in Brunswick. The first (3 weeks ago) had a reserve of $640,000 and sold for $761,000. The second (yesterday) had a reserve of $670,000 and sold for $760,000. So, yep, I'm pretty much convinced my valuations are correct, if not too conservative.

Oh, and I forgot to mention that in the same period (12 months), I've increased my rent on all 3 properties by an average of 9%, which was happily accepted by all tenants.

 

[wayneL]

Yes but that wasn't the question asked. Like anything in the economy, there is always the potential for too much money to flow into area's that might be considered "less productive" than others due to speculation. However the same argument against house prices on this front could be made against the bulk of share trading that goes on, the speculative side of just about every futures trade, the diversion of consumer spending to imported goods and so and so on. I mean is people investing in Gold "productive"? No way! Gold does nothing, it can't even generate some income, yet large amounts of capital flow to buy the stuff because people perceive it is a way to protect their wealth. How come everyone isn't banging on about all the wasted money flowing into "unproductive" gold? It's tripled in price in the last 10 years as well right?

No matter what you can not make 100% of your available capital in an economy flow into those things and only those things deamed "correct" or "productive" by whatever authority may deem it so at any particular time. It is a fact that land as a commodity is valued and scarce (in that you can't really create more when you look at particular locations etc). Housing is a utility that is in demand, as it forms a major part of people's standard of living.

The 2 combined (land + house) makes property valuable, because it is desired and in demand. At the end the day this will result in a situation where prices are set based on the capacity of those generating the demand to pay (derived from wages/incomes - not just average, availability of credit, cost of credit, other sources of capital like the share market etc, savings, stored wealth and so on).

For these reasons, no dry economic argument anyone makes about the productive use/flow of capital is going to change the behaviour of the housing market, which will always be driven by those fundamentals listed.

Beej,

Your points are fine, but once again take the exyteme binary line. This is a fine technique for a primary school debate, but it is unintelligent one in a grown up conversation, as it insults the intelligence.

When you've finished with the straw-man building, we can have a reasonable discussion.

Cheers

 

[kincella]

Australian Government invests $8bn in mortgages

AAP
October 11, 2009 10:17am
THE Federal Government will invest a further $8 billion of taxpayers' money in new residential mortgage-backed securities (RMBS) to support the home lending market, Treasurer Wayne Swan said today.
The government first stepped in to support the RMBS market last year after it practically shut down due to the global credit crunch.

"The Government will direct the Australian Office of Financial Management to provide up to a further $8 billion of support to new issuances of high-quality RMBS, depending on market conditions," Mr Swan said today

"This investment will provide a major boost to smaller lenders and promote competition in the mortgage market, helping to put downward pressure on borrowing rates over time."

Mr Swan said the additional investment wouldn't add to net debt "as the Government will be investing in, and become the holder of, high quality AAA-rated assets".

The Federal Government invested an initial $4 billion to boost competition in the mortgage market in September 2008.

http://www.news.com.au/story/0,27574,26194502-29277,00.html

 

[Soft Dough]

Australian Government invests $8bn in mortgages

AAP
October 11, 2009 10:17am
THE Federal Government will invest a further $8 billion of taxpayers' money in new residential mortgage-backed securities (RMBS) to support the home lending market, Treasurer Wayne Swan said today.
The government first stepped in to support the RMBS market last year after it practically shut down due to the global credit crunch.

"The Government will direct the Australian Office of Financial Management to provide up to a further $8 billion of support to new issuances of high-quality RMBS, depending on market conditions," Mr Swan said today

"This investment will provide a major boost to smaller lenders and promote competition in the mortgage market, helping to put downward pressure on borrowing rates over time."

Mr Swan said the additional investment wouldn't add to net debt "as the Government will be investing in, and become the holder of, high quality AAA-rated assets".

The Federal Government invested an initial $4 billion to boost competition in the mortgage market in September 2008.

http://www.news.com.au/story/0,27574,26194502-29277,00.html

What a fool.

Going to war with the reserve bank.

Imo property investors would be best served havng a competent, rational treasurer who allows prices to moderate / show no growth over the next 5 or so years, instead of building up pressure in the most expensive housing market in the world.

Why not put that 8 billion into business loans and protect/create jobs and revenue into the future.

Is there an election soonish... methinks so.

 

[gfresh]

People don't quite spend the same proportion of their income on LCD TV's or other trinkets as they do housing BeeJ, but some of your other points valid.

It's a shame a lot of the revenue from the housing obsession does flow overseas to China. It wasn't that long ago you bought a hammer from Bunnings (or the equivalent 15 years ago) that was actually made in Australia. Mr hammer producer employed a lot more people than simply a handful of unskilled sales monkeys at your local Bunnings today. Then again, our mining industry maybe employs a lot more people than it did in the past too, which supplies the Chinese materials to make our goods.

What a fool.

Going to war with the reserve bank.

Imo property investors would be best served havng a competent, rational treasurer who allows prices to moderate / show no growth over the next 5 or so years, instead of building up pressure in the most expensive housing market in the world.

Agreed.. I fail to see how providing further credit to smaller lenders actually drives interest rates down! In fact it's probably the exact opposite! Increase the supply, and you increase the boom, as we saw in 2000-2007.

As said many times, we need proper political action on this to encourage new building, and higher density inner city living, better public transport, and piss off dead end industries such as our uncompetitive vehicle industry, and probably cars themselves.. both sides of parliament are just as bad however on this issue.

 

[wayneL]

Is there an election soonish... methinks so.

Can we somehow resurrect Sir John Kerr? We will need a GG with balls when the time comes.

 

[satanoperca]

Interesting points from all sides, however ...
Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
What would this mean to Oz?

A major mindset change.
Freeing up huge amounts of current and future capital that is currently locked up in mortgages benefiting the 4 pillars of society.
A pursuit to create wealth and prosperity through innovation and efficiency funded by not having to support massive indebtness via mortgages which drag on the economy and reduce GDP.
More displosable income for people to spend, increasing quality of life and generating jobs for the country instead of fat cat bankers. Eg holidays, eating out, clothes, furniture, interiors, cars, time off with the childrens @ the zoo or down the beach.....
Taxes could be increased, as people would have more disposable income to provide better healthcare, education, looking after the elderly, all increasing again quality of life.

Will the above ever eventuate, who knows but I do not think that having some of the highest property prices in the world is good for society or having the highest quality of life?

 

[gav]

I copied this post....it was posted on another forum today....again the rises are in the inner suburbs...you will not see gains like that out in the cheaper areas....

Actually some cheaper outer suburbs have seen considerable gains as well. Even though I only purchased my first PPOR earlier this year, I like to keep an eye on the sales in my suburb - particularly my street.

On my street in the past 2 months, 2 places a lot smaller than mine (with houses roughly same age as mine) sold for $30K more than I paid.. Another place the same size as mine (also with house same age) sold for $65K more than what I paid! There are also 3 small townhouses being built about 50m from my place, asking price off the plan is $50K more than I paid, and they are all WAY smaller than my place!

If I decided to wait and save a little longer, I would have been priced out - unless of course I broke my rule of having a 20% deposit, and that includes the money I would have saved in the mean time...

I don't know if this is sustainable, but I really feel for people trying to save for their first home.

 

[MrBurns]

I was going to comment on Mr Burns' post going on about all the Chinese buyers and blaming Rudd for everything that's wrong with the housing market, but I really can't be bothered to go there.
Cheers,
Beej

It's all true.

 

[MrBurns]

Mr Swan said the additional investment wouldn't add to net debt "as the Government will be investing in, and become the holder of, high quality AAA-rated assets".

ROFL Swan wouldnt know AAA rated investment if he fell over it.

Prices will only hold as long as he keeps interfering.

Your taxes at work

 

[MACCA350]

Interesting points from all sides, however ...
Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
What would this mean to Oz?

A major mindset change.
Freeing up huge amounts of current and future capital that is currently locked up in mortgages benefiting the 4 pillars of society.
A pursuit to create wealth and prosperity through innovation and efficiency funded by not having to support massive indebtness via mortgages which drag on the economy and reduce GDP.
More displosable income for people to spend, increasing quality of life and generating jobs for the country instead of fat cat bankers. Eg holidays, eating out, clothes, furniture, interiors, cars, time off with the childrens @ the zoo or down the beach.....
Taxes could be increased, as people would have more disposable income to provide better healthcare, education, looking after the elderly, all increasing again quality of life.

Will the above ever eventuate, who knows but I do not think that having some of the highest property prices in the world is good for society or having the highest quality of life?

Teleport me now........sounds like nirvana

cheers

 

[Macquack]

Interesting points from all sides, however ...
Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
What would this mean to Oz?

A major mindset change.
Freeing up huge amounts of current and future capital that is currently locked up in mortgages benefiting the 4 pillars of society.
A pursuit to create wealth and prosperity through innovation and efficiency funded by not having to support massive indebtness via mortgages which drag on the economy and reduce GDP.
More displosable income for people to spend, increasing quality of life and generating jobs for the country instead of fat cat bankers. Eg holidays, eating out, clothes, furniture, interiors, cars, time off with the childrens @ the zoo or down the beach.....
Taxes could be increased, as people would have more disposable income to provide better healthcare, education, looking after the elderly, all increasing again quality of life.

Will the above ever eventuate, who knows but I do not think that having some of the highest property prices in the world is good for society or having the highest quality of life?

satanoperca, you have my vote.

What the property bulls dont appreciate is that after their property has gone up a squillion percent and is worth a zillion dollars, guess what? You can only exchange it for a similiar property in a similar location. (bummer).

 

[MrBurns]

satanoperca, you have my vote.

What the property bulls dont appreciate is that after their property has gone up a squillion percent and is worth a zillion dollars, guess what? You can only exchange it for a similiar property in a similar location. (bummer).

AND the Council and water rates go through the roof.
AND if you sell and buy something else the commission and stamp duty is much higher AND on it goes....................

 

[Macquack]

Can we somehow resurrect Sir John Kerr?

NO. Let the prick rot in hell.

 

[robots]

satanoperca, you have my vote.

What the property bulls dont appreciate is that after their property has gone up a squillion percent and is worth a zillion dollars, guess what? You can only exchange it for a similiar property in a similar location. (bummer).

AND the Council and water rates go through the roof.
AND if you sell and buy something else the commission and stamp duty is much higher AND on it goes....................

hello,

hahahahaha

move one suburb out 40k in pocket, two suburbs back 80k in pocket, 10 suburbs out 200k in pocket,

sell up and buy trailer for the pushie and a tent, all in pocket,

rent and hand the keys in ZERO in pocket, goodluck as you can do as you please in this fine country

the longer you CFD salesman and financial advisors keep going on about it the better as the $ keep piling up in my pocket, utopia

the holders of true wealth, and its all TAX FREE

thankyou
professor robots

 

[Vizion]

Banks to outdo RBA rate rise

Updated: 11:22, Sunday October 11, 2009

The big four banks are set to increase mortgage rates by more than the official Reserve Bank rises in the coming months.
They say they'll be forced to make extra increases as they face higher costs.
The warnings are likely to anger Treasurer Wayne Swan, who has repeatedly called on lenders to pass on only what the RBA adds to the official cash rate.
The main banks have already passed on the full quarter percent increase announced by the Reserve Bank last week.

 

[robots]

hello,

hahahahaha

go from a 4-bed house to a 3-bed or a 2-bed, BANG in the pocket it goes

2 bed unit to 1 bed unit, BANG in the pocket again

hahahahahahaha

all tax free, paradise brothers

but hey, let the CFD saleman, Futures Brokers, Brokerage Houses, Share Trader Magazine all keep the spin going

thankyou
professor robots

 

[Vizion]

This forum needs an ignore function...

 

[robots]

Interesting points from all sides, however ...
Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
What would this mean to Oz?

A major mindset change.
Freeing up huge amounts of current and future capital that is currently locked up in mortgages benefiting the 4 pillars of society.
A pursuit to create wealth and prosperity through innovation and efficiency funded by not having to support massive indebtness via mortgages which drag on the economy and reduce GDP.
More displosable income for people to spend, increasing quality of life and generating jobs for the country instead of fat cat bankers. Eg holidays, eating out, clothes, furniture, interiors, cars, time off with the childrens @ the zoo or down the beach.....
Taxes could be increased, as people would have more disposable income to provide better healthcare, education, looking after the elderly, all increasing again quality of life.

Will the above ever eventuate, who knows but I do not think that having some of the highest property prices in the world is good for society or having the highest quality of life?

hello,

this already occurs though Satanoperca,

I notice on the list you dont have spend disposable income on an investment property, (provides work when I replace the carpet, lay new tiles, paint walls, double glaze windows)

but okay to give it to Gerry Harvey, or TPG (Myer), Dick Smith, the local restauranter

amazing

great to see Kincella online today,

thankyou
professor robots

 

[explod]

hello,

hahahahaha

go from a 4-bed house to a 3-bed or a 2-bed, BANG in the pocket it goes

2 bed unit to 1 bed unit, BANG in the pocket again

hahahahahahaha

all tax free, paradise brothers

but hey, let the CFD saleman, Futures Brokers, Brokerage Houses, Share Trader Magazine all keep the spin going

thankyou
professor robots

Got to hand it to you Professor, still banging away.

Now what has your last post got to do with "house prices to keep rising for years"

Now having old Mont Martha roots you ought to be able to do much better that what you just posted brother

Back on topic, notice the "for sale signs popping up faster than rabbit ears, but the sold stickers seem to be dissapating. Be some great bargains for us in this neck of the woods in a year or two brother. Rent vacancies going up here too. lots of parents finding the chickens returning to the roost.

Go robots