House prices to keep rising for years

[gfresh]

I'm starting to believe the RBA will be quite effective at killing any bubble in housing develop, although still a little unsure whether their jawboning is just that, or they honestly want to slow house price rises. 2% rise in the cash rate should do it. Would mean in real terms property could prove a poor investment for a while. The RBA can always raise the "rent" every month, investors cannot.

Although there is always that black swan flying about looking for a place to land, that can tend to unsettle perfectly laid fiscal plans

For Brisbane, looks like things are almost coming together for a 90's repeat for Brisbane, where unemployment is now the highest in the country (on published figures anyhow), the usual growth in tourism and coal mining is floundering, and the government near broke (a high % employer up here). Seeing as monetary is done on a country-wide basis, any rises to slow the south, are going to effect the north even more so. Exhibit A ..

 

[robots]

hello,

http://www.theage.com.au/business/what-price-a-home-20091016-h0ey.html

looks as though Chris been visiting ASF, its SPECIAL alright Chris

the true visionaries called it, called it and called it, well done brothers

i hope in the future many more join us at this special place

thankyou
Dr Robots

 

[MACCA350]

hello,

http://www.theage.com.au/business/what-price-a-home-20091016-h0ey.html

looks as though Chris been visiting ASF, its SPECIAL alright Chris

You obviously didn't get the drift of the article

Here's a couple of hints:

Sky-high

If home affordability has been utterly vapourised by the skyward climb of home prices, you would think someone would sound the alarm.

But who? The economists who work for the banks that write the loans? The real estate agents who depend on commissions for sales? The housing research industry analysts who depend on a buoyant market to sell their reports? The politicians who inherited the current tax system? The homeowners watching the values of their homes soar into the millions? Or even, ahem, the media who write stories such home buyers invariably want to read?

To use the language of addiction, there are too many "enablers" but there's precious little "intervention" where needed to address the madness........


.....By many objective criteria, Australia truly is a special nation. The natural splendour, the cultural mix, the outward-looking optimism are just a few aspects. But the future of a country where entire segments of the population are immobilised by onerous debt is a feature that could bring Australia an unwelcome mark of distinction.

Special indeed

 

[MACCA350]

Oh, and just for the sake of it, here's the graph linked to in the article:

cheers

 

[robots]

hello,

awesome graph Macca350, not sure about the representation of construction costs there, seems out of wack

gross generalisation, everyone has debt stress, everyone has an average income, blah blah blah

rent if its the such a good deal, you dont have to buy a place and get a loan

SPECIAL

thankyou
Professor Robots

 

[grace]

A few months ago, I was at a conference with the major banks represented, as well as APRA, etc etc

They stated that normally, 5% of FHB's loans have personal guarantees by parents. Only a couple of months back, they were saying that now 45% of FHB's loans are guaranteed by parents. (I will check my notes from this conference and get back to you all - this is from memory - I will check the stats for sure and confirm in a couple of days).

This is very scary indeed. They could not afford the loan, even at record low interest rates.

Ladies and Gents, thought I would update you with the stats as per COSL (Credit Ombudsman Services Ltd) at this conference.
Normally, parents guarantee 5% of all FHB's loans. In August 09, the stats were 40% off all loans written to FHB's had parent guarantees at 95% leverage. I recall being quite frightened when I heard this at the time.

 

[Knobby22]

Maybe it isn't so unsustainable.
I am impressed with the real average income line. Up 40% in 15 years if that graph is correct! That's impressive

You know in the states, the general populace has been getting poorer over the same period.

 

[satanoperca]

In August 09, the stats were 40% off all loans written to FHB's had parent guarantees at 95% leverage. I recall being quite frightened when I heard this at the time.

If these figures are correct, then it is frightening. Not only have FHB been suckered their parents could also get burnt.

This leaves very little room for any hiccups in the property market that could result in prices retreating such as IR increases, lack of demand due to FHB already purchasing, reduced freebies from the government and credit lending tightening.

No subprime here, if you cannot afford to save for a deposit, just use the equity in your parents house.

This is very similar to a story my accountant told me off. Kids get mum and dad to jump on the property boom of 2006. Using 80% equity in the full owned home they purchase an expensive apartment. Banks revalues the property after 1.5 years and determines it value to be $140K less than the purchase price and asks them to stump up the money to cover the short fall as their investment loan was %95 LVR. End result, bank sold the investment property for a huge loss and then sold the family home to cover the short fall. In two short years, mum and dad had lost the family home of 35 years and was down over $200K.

As a famous professor once said, sunshine and lolipops.

 

[Quincy]

. . . In August 09, the stats were 40% off all loans written to FHB's had parent guarantees at 95% leverage. I recall being quite frightened when I heard this at the time.

At 95% leverage, should interest rates continue to rise and should prices in the subject FHB range fall for any reason then these parents who provided the guarantees might find themselves in a difficult place.

 

[Judd]

At 95% leverage, should interest rates continue to rise and should prices in the subject FHB range fall for any reason then these parents who provided the guarantees might find themselves in a difficult place.

Never, ever go guarantor for anyone even your children despite the fact that they will choose your nursing home bed.

With ours its been a "get the loan on your own merits" situation. Two have and one still building a deposit. For those who have, after they settled and commenced repayments, we've dump into the mortgage the legal and stamp duty costs. That is as far as we will go now and in the future.

 

[robots]

hello,

good evening, a fine day again

just amazing how prices are going at the moment, many people have totally cleaned up Bigtime over the past 12mths

a big Well Done to those who selected this asset class, bathing in it

thankyou
Doctor Robots

 

[satanoperca]

hello,

good evening, a fine day again

just amazing how prices are going at the moment, many people have totally cleaned up Bigtime over the past 12mths

a big Well Done to those who selected this asset class, bathing in it

thankyou
Doctor Robots

Robots, you have only cleaned up when you have sold at a profit.

Those selling to FHB got the best free sugar kick from our courageous leader, KRUDD one could ask for as an individual in a life time.

Cheers

 

[MrBurns]

hello,

good evening, a fine day again

just amazing how prices are going at the moment, many people have totally cleaned up Bigtime over the past 12mths

a big Well Done to those who selected this asset class, bathing in it

thankyou
Doctor Robots

Thats right and many more people will be cleaned up big time in the next 12 months. Good evening and thank you too.

Please see future projection of the housing market in graph form (below), this was produced by "experts" so it cant possibly be wrong.

 

[robots]

hello,

just to let everybody know i will stick around tonite for a while if you have any questions regarding buying a property

many years ago we used to run Q & A of an evening where many great ASF memers provided answers to those with questions

i know Chops a Must loved participating in Q & A and often kicked off the night, so i hope someone can fill his shoes

thankyou
Doctor Robots

 

[Bill M]

Dear Robots, I bought a house on the Central Coast and my wife and I will move in it next week. My question is, should I sell my well located unit on the Northern Beaches in Sydney for 400K or should I rent it?

I am concerned because even though I could get $400 a week rent my out goings including levys, rates, agents fees, water rates, insurance and tax will give me only $200 a week net return where as if I put it in fixed interest I could double that. Should I sell or hang on a get this return? Or would you think the stockmarket would be a better bet? Any help would be appreciated.

 

[robots]

hello,

hang on to it Bill M, unless you "really" need the cash

superb location, sit tight

put it up for rent and help out a member of the community and just ride the wave of residential property

with the shonk market you will have to deal with boards, management, regulation but with plain old vanilla real estate its all you and utopia

great start

thankyou
Doctor Robots

 

[MR.]

This article was making sense then:

http://www.thebull.com.au/articles_detail.php?id=6798

At the start of the year, people putting their property on the market were doing so out of a sense of despair, but now they're looking for the opportunity to upgrade or invest, he said.

Why are people now looking to upgrade or invest?
Job secure! Interest rates low! more speculation?
Rental returns are still terrible!

 

[Beej]

Rental returns are still terrible!

Where do you think they are terrible? They are not too bad over-all in Sydney and quite good in some particular areas? Do you call 5.5% NET (6.5% gross) return good? Bad? Or mediocre? I saw a 1 bedder sell last week on the lower north shore providing this return, and there are other similar properties still around.

Cheers,

Beej

 

[satanoperca]

Rental Returns from Risdex September -

House Melbourne
Median $524K
Rent Median $19k
Gross Return %3.6

Apartment Melbourne
Median $400K
Rent Median $18k
Gross Return %4.5

House Sydney
Median $610K
Rent Median $25k
Gross Return %4.0

Apartment Sydney
Median $427K
Rent Median $22k
Gross Return %5.1

House Australia
Median $415K
Rent Median $18k
Gross Return %4.3

Apartment Australia
Median $369K
Rent Median $18k
Gross Return %4.8

Looks like apartments are better but would expect holding costs to be greater, body corporate.

Add on top of that average capital growth of %8-10 pa and it looks like property is a winner but that growth rate needs to be compared to the growth in household debt would I guess in somewhere around 5-10% anyway.

Cheers

 

[MR.]

Beej, had read about your one bedder before somewhere here.

From my figures for example Pacific Pines (Gold Coast QLD) 3.93% net, Watsonia (Melbourne VIC) 3.73% net, Springwood (Brisbane Qld) 4% net. These are houses not units as well.

That 5.5% of yours can be achieve as a bank deposit if someone had the cash. Honestly never really looked at small units because of control issues.

Trying to be in the glass half full group but just can’t see it....