House prices to keep rising for years

[pepperoni]

wages and personal wealth will only impact on the median house price,

It is possible for long term property prices to increase faster than inflation without the median house price increasing faster than wages and inflation.

Im sure its possible if the stock market is on fire forever or something .. but generally the people buy houses with a mix of savings, debt that needs to be serviced from wages/salaries/rents, and the proceeds of their last house (and investment properties) so houses in mosman for example and definitely affected by chages in median house prices.

 

[pepperoni]

"Wary buyers shave $11,000 off house prices" http://www.theage.com.au/news/natio...ff-house-prices/2008/03/29/1206207499082.html



Wow fundamentals do effect house prices. And Ive been following robots auction clearance report as gospel of property market returns

More than a 2 percent loss .. going backwards at the same rate that hassle free cash is going forward.

 

[Tysonboss1]

"Wary buyers shave $11,000 off house prices" http://www.theage.com.au/news/natio...ff-house-prices/2008/03/29/1206207499082.html



Wow fundamentals do effect house prices. And Ive been following robots auction clearance report as gospel of property market returns

More than a 2 percent loss .. going backwards at the same rate that hassle free cash is going forward.

only 2%,.... seems to have faired better than the sharemarket,

 

[Tysonboss1]

Im sure its possible if the stock market is on fire forever or something .. but generally the people buy houses with a mix of savings, debt that needs to be serviced from wages/salaries/rents, and the proceeds of their last house (and investment properties) so houses in mosman for example and definitely affected by chages in median house prices.

The median House price will always be within the limits of wages,... How ever the True Median Home (average House), is not the same size and siting on the same amount of land as it was 20 years ago,.... and twenty years into the future the median house will be smaller and siting on less land than it is today.

If you bought 4 bed home on a 1/4 acre block within 10k's of sydney it probally was considered a median home,... but that same house today would probally be worth 3x the median sydney home value today, because what is classed as the average home today will be larger and more valuable than the average home in the future,

 

[refined silver]

I disagree. I speak in English though, not in econolect. :

Obviously why I am not an economist.

For someone who recently started a thread on defining a word, "demand" and its distinction from "desire" is not that difficult to master.

**** you Comte!

To respond with "f!@# you" to someone who questions one of your posts, and "bollocks" etc to other posters, shows that your ethics are on the same level as your economics.

 

[chops_a_must]

For someone who recently started a thread on defining a word, "demand" and its distinction from "desire" is not that difficult to master.




To respond with "f!@# you" to someone who questions one of your posts, and "bollocks" etc to other posters, shows that your ethics are on the same level as your economics.

That comment in no way was directed at you. A little wikipeding could have saved you some anguish.

And from dictionary.com in relation to demand:

9. Economics.

a. the desire to purchase


I will concede that demand does incorporate some degree of ability to pay. But the problem with these economic models is that they are a derived measure, and have to be a reduction. The fact that all these individual parts have to be coupled together, means they can't be considered in their entirety.

My main criticism stands.

 

[chops_a_must]

Banks just don't lend willy nilly,... there is plenty of serviceabilty checks done when you go for a loan

Ah yeah...

Commonwealth Bank 'exploited refugees'

The Commonwealth Bank has been accused of exploiting refugees in its allocation of loans.

A consumer advocate group says the Bank made a series of irresponsible loans to Sudanese refugees, who were often unemployed and had limited financial understanding.

...

http://www.abc.net.au/news/stories/2008/03/31/2203069.htm

Lol!

 

[refined silver]

And from dictionary.com in relation to demand:

9. Economics.

a. the desire to purchase


I will concede that demand does incorporate some degree of ability to pay. But the problem with these economic models is that they are a derived measure, and have to be a reduction. The fact that all these individual parts have to be coupled together, means they can't be considered in their entirety.

My main criticism stands.

The full quote from dictionary.com

Economics.
a. the desire to purchase, coupled with the power to do so.
b. the quantity of goods that buyers will take at a particular price.

I would go further than the dictionary defintion at (a). (b) is better, cos even the desire to purchase and the power or ability to do so, still isn't demand until I actually choose to do so, (or would choose at another price.)

There are things I desire and have the power to buy but don't. Until i put my money where my desire is, (or would put it there at a certain price) its not demand. Anyway I'll let this go, I've said my piece.

Cheers.

 

[Tysonboss1]

Ah yeah...



Lol!

I bank with the cba and hav always had to jump through hoops to get loans,... especially when it came to loans under my company name.

If you get into trouble with your loans it either because you have fudged some figures some where, you haven't protected your self from possible rate rises or you have been unlucky and lost your job,...

I have heared alot of people on this forum bag out fixed loans,... But if you are just starting out and a few rate rises could push you over the edge, its nota bad idea.

 

[Tysonboss1]

That comment in no way was directed at you. A little wikipeding could have saved you some anguish.

And from dictionary.com in relation to demand:

9. Economics.

a. the desire to purchase


I will concede that demand does incorporate some degree of ability to pay. But the problem with these economic models is that they are a derived measure, and have to be a reduction. The fact that all these individual parts have to be coupled together, means they can't be considered in their entirety.

My main criticism stands.

I would say that desire by itself is not demand,.... I would say that true demand is "desire at a certain price".

I will use the toyota prius as an example,... all the girls in my group of friends would love to own a Prius ( so they desire one), but none of them wish to buy one at it's current price of $37,999, So really they are not creating any demand because they are not willing to pay that price. If the price droped $15,000 they and probally alot of others around the world all be willing to buy one so demand would increase, but the desire would still be the same.

 

[IFocus]

I bank with the cba and hav always had to jump through hoops to get loans,... especially when it came to loans under my company name.

If you get into trouble with your loans it either because you have fudged some figures some where, you haven't protected your self from possible rate rises or you have been unlucky and lost your job,...

I have heared alot of people on this forum bag out fixed loans,... But if you are just starting out and a few rate rises could push you over the edge, its nota bad idea.

In the easy credit market unfortunately this is what happens and when the bad loans start blowing up it rolls onto affecting the main market.

Watched four corners last night pretty sobering but not unexpected........

 

[gfresh]

Was sobering watching.. for those that missed it..

http://abc.net.au/4corners/content/2008/20080331_debt/interviews.htm

The one family was overplayed a little, but no doubt there are very many in the same situation. When unemployment rises (which it will), there is going to many more put into stress.

 

[Tysonboss1]

Was sobering watching.. for those that missed it..

http://abc.net.au/4corners/content/2008/20080331_debt/interviews.htm

The one family was overplayed a little, but no doubt there are very many in the same situation. When unemployment rises (which it will), there is going to many more put into stress.

I watched the link today, I can't believe these people put so much blame on the lenders.

Just because a credit company tries to upsell you more credit doesn't mean you have to take it ( every business will try and upsell, at the end of the day it's up to you to judge if you can afford it and if you need it ). The family concerned made three big mistakes

1, bought a house that was to expensive for them,

2, Failed to protect them selves from rising interest rates,

3, continued to take more and more consumer debt instead of facing the facts that they can't afford the home and sell out earlier.

 

[IFocus]

I watched the link today, I can't believe these people put so much blame on the lenders.

Unfortunately there are many people who don't think to far ahead or past the "I want it now". They get blasted 24hrs a day by the media advertising that its all OK and thats how it is with BS like "equity mate".

The lenders clearly have a huge responsibility because they are the ones with the knowledge, they have the numbers as to when people blow up and the conditions when this happens. I was realy shocked at how slack the big 4 have gotten never mind GE's 28% entry credit card.

The observation about charging 28% allows more defaults on payment but still be a profitable business sends alarm bells ringing as maybe the major banks now use the same formula.

Also the bank analysis comments on the effects the credit card debt may have flowing back to mortgage defaults is also very alarming.

Not only a financial issue but likely to become a very nasty issue for the community in general.

House prices here in the West have clearly slowed and this is with a F1 economy at full tilt, warp speed 10 I think prices around Oz are going to take a hit......IMHO

 

[gfresh]

I agree, people do definitely have to take responsibility for their own actions, so there is no denying that if you ask me.

With your 3 points, this is true, however the question is, how many of them are there out there? I know several who would be in this position - all it will take is the loss of one job in the family, and their house is up for sale in a matter of weeks. None of them are "poor", all are well educated, and all are on roughly the average income, with what I would classify as nothing extravegent in terms of the home they've purchased. Well, unit to be specific, "houses" are beyond the reach of most GenY's these days.

If everybody knows even one or two couples who are, or could be in this situation so easily, it's a scary thought the total numbers.

Unfortunately for many, they just see the price going up and up, and think "well if I don't buy now, I will never be able to buy". Then we hear the constant likes of "rent money is dead money". And they lose some logic along the way. Or they buy the house, and then everything else goes on credit (new car, tv, furniture from Harvey Norman, etc). In turn this sort of attitude can push house prices in some areas way beyond any reasonable valuation. The longer the boom goes on, the more the attitude is hard to shake.

 

[Tysonboss1]

The lenders clearly have a huge responsibility because they are the ones with the knowledge, they have the numbers as to when people blow up and the conditions when this happens. I was realy shocked at how slack the big 4 have gotten never mind GE's 28% entry credit card.

a lender can only make judgements based on the infomation they are given, People need to take into consideration that if they are signingup for a 30year loan they need to monitor the situation of the economy and make allowences for things to change, If they knew they were only just getting by,.. why not fix their rate,.... why not buy a smaller house in the first place,.... why go to havey norman and stock up on new furniture to fil your house with

Personally I don't like GE money,... But in defence of their 28% interest rate, It is 28% interest because the first 12 months are interest free, I use one of these cards myself,.... I bought a computer on it for $2000, I have the $2000 sitiing in an account earning interest as soon as the 12 month iterest free period is up I will pay off the card,.... It's all about using the right tool for the job.

People's

 

[IFocus]

a lender can only make judgements based on the infomation they are given, People need to take into consideration that if they are signingup for a 30year loan they need to monitor the situation of the economy and make allowences for things to change, If they knew they were only just getting by,.. why not fix their rate,.... why not buy a smaller house in the first place,.... why go to havey norman and stock up on new furniture to fil your house with

I share your sentiment but I think / know most don't make allowances we seem become more and more like the US in every way.

If you take the four corners program at face value clearly the lenders are fudging the numbers knowingly.

The loans to Sudanese refugees was a shocking example

 

[Tysonboss1]

I know several who would be in this position - all it will take is the loss of one job in the family, and their house is up for sale in a matter of weeks. None of them are "poor", all are well educated, and all are on roughly the average income, with what I would classify as nothing extravegent in terms of the home they've purchased. Well, unit to be specific, "houses" are beyond the reach of most GenY's these days.

.

I don't think this is any different to my parents when I was growing up.

If dad had lost his job we probally would have lost the family home too,...

It's made worse though by people over commiting them selves,... It's true the average family should not be attempting to by a house like what was in the four corners footage within 20K's of sydney, unless they are well off.

these defaults are caused by people wanting to much to soon,... so many people try to start where their parents have finished, forgeting that it has taken a life time for their parents to accumulate what they have.

 

[gfresh]

Property correction risk in Australia 'high'

April 4, 2008 - 6:30AM

The risk of a correction in Australian house prices is high by international standards, the International Monetary Fund (IMF) says.

The IMF, which says Australian property is among the most overvalued in the developed world, has warned that about 25 per cent of the increase in house prices between 1997 and 2007 cannot be explained by fundamental economic factors such as population growth and income, The Australian Financial Review reports today.

The fund ranks Australian residential property fourth among developed nations, behind Ireland, the Netherlands and Britain in terms of vulnerability to a drop in value.

The warning comes as pressure mounts on the federal government to spark competition in the home-loan market and assist non-bank lenders affected by the global credit crunch to secure funding.

Concerns about the financial pressures on households and a deterioration in competition in the mortgage market are likely to be raised when the Reserve Bank of Australia Governor Glenn Stevens appears before a parliamentary committee in Sydney today.

AAP

 

[cuttlefish]

The house 3 doors down from me sold on the weekend for just shy of $1.8 million. If you include the $85k stamp duty thats close to $1.9 million down.
(the house is a well renovated 3 bedroom brick bungalow on approx 400 sqm block).

Rents in the area have risen as far as I know and a reasonable rent would be around the $900-$1000k/week mark, possibly up to $1200/wk but that would have to be about the upper end.

So if looking at it from an investment perspective thats a yield under 3.5% at a time when loan rates are over 8% and cash rates are 5% plus.

Its true that rentals have risen quite considerably and I guess continued rental growth could contribute to improved yields - though even at the wages being paid today $1200/week seems like a fair bit to pay to rent a house. Free standing houses in tightly held area's are also a land investment which could possibly justify a lower yield than say for an investment property in an area where land isn't scarce, or in a strata unit.

But if sentiment towards property changed we'd be looking at a very different price scenario I suspect. In a flat market with a lot of negativity, lack of confidence and fear its not unusual for investment yields to get close to parity with bank interest rates even in tightly held 'blue chip' suburbs.