House prices to keep rising for years

[Gspot]

It's worrying, with all the doom and gloom in the world, that seems very real.
Yet confusing for the ol folks living in Perth, who are still crying out for skilled immigrants on a large scale, as the state keeps booming along.
Houses are coming on the market, and taking longer to sell, but try renting! Last week went down to Mandurah, and local real estate co, only had 1 property for rent, which was crap. People got to live somewhere.

 

[gfresh]

Despite what people tell you about house prices can continue to go up, there is an equilibrium point where house prices go too far that people can't afford them - they simply outstrip wages/household income. I suspect Sydney reached that equilibrium point in 2003, and the rest of Australia is just meeting it now.

I think so.. and prices did get ahead of themselves, and since then the NSW economy has stagnated. With VIC it seems largely immigration based. QLD has benefited from people leaving VIC and NSW. Both of which seem be the key driver for a lot of the housing growth in these areas..

I think the trend is for people to be leaving Sydney, not moving there.. this is never good for housing values. In fact, expensive housing may be one of the key reasons why people have left Sydney. Why work your ass off to afford a property that takes you hours to get to work, and have to work incredibly long hours to pay for it? Some people have realised it's not like that in all the other states (yet).

 

[stock_man]

Post from another forum, take it as a grain of salt if you wish


Probably in Sydneys trasiest suburbs, but if true it shows the guts starting to fall out of the low end.

Hardly worth a grain of salt. A quick check on realestate.com.au in Sydney and surrounds (ie the city) returns plenty of properties that have been for sale for a while, and I can think of suburbs that have always had units under 200K.

It's worrying, with all the doom and gloom in the world, that seems very real.
Yet confusing for the ol folks living in Perth, who are still crying out for skilled immigrants on a large scale, as the state keeps booming along.
Houses are coming on the market, and taking longer to sell, but try renting! Last week went down to Mandurah, and local real estate co, only had 1 property for rent, which was crap. People got to live somewhere.

That local re agent in Mandurah is about to close its doors. Another quick search on realestate.com.au returns 112 properties for rent...

But totally agree with you. In Sydney, any chosen suburb would be luck to have half those vacancies. Where I live there is 4, and each 1 has applications on it before they even show it to prospective tennants. I myself placed an application in for my place sight unseen - crazy times....

 

[robots]

Another vested interest putting a brave face on a depressing situation. As far as I'm concerned if you want to know what is really going on, DO NOT listen to anyone who has a vested interest in bulling the market up, or putting forward arguments as to why it will not fall.

It's what the man is paid to do. Nothing personal.

hello,

yep, and the same can be said for every blog around from s.keen, financial sense crew, GHPC, mr imber and any others

get the facts from the state revenue office, thats where you find out the sales history of a particular house,

get out and about at auctions, ofi, very few here do that

thankyou

robots

 

[CAFA1234]

hello,
yep, and the same can be said for every blog around from s.keen, financial sense crew, GHPC, mr imber and any others
get the facts from the state revenue office, thats where you find out the sales history of a particular house,
get out and about at auctions, ofi, very few here do that

thankyou
robots

Agreed. The state revenue office is the main source, however it is months late. Legislate and regulate this industry NOW, and allow Joe Public a level (almost) playing field.

 

[CAFA1234]

February marked another month of steep price declines for existing homes across the U.S., according to single-family home data released Tuesday by Standard & Poor's. And first-quarter foreclosure data from RealtyTrac only lends to the bleak picture of the national market.

The S&P/Case-Shiller Indices, which examines the housing market in 10-city and 20-city composites, shows prices declined more than 12.5% over last year. Looking at the 10-city composite, prices declined in February by 2.6% over January and by 13.6% over last February. The 20-city composite showed a 2.6% month-over-month decline and a 12.7% year-over-year decline.

The February data mark the sixth consecutive month of declines for each of the metropolitan areas covered. And there's little prospect of near-term improvement in the numbers. Every one of the 20 MSAs examined showed a decline in February from the previous month. And 19 of the 20 MSAs continued their year-over-year declines.

"There is no sign of a bottom in the numbers," says David Blitzer, chairman of the Index Committee at Standard & poor's. "Prices of single-family homes continue to drop across the nation. ... The monthly data show that every one of the MSAs has now declined every month since September 2007, marking six consecutive months. On top of that, the declines have remained steep with eight of the 20 MSAs and both composites reporting their single largest monthly decline in February."

Las Vegas and Miami, two markets that recorded some of the largest price growth in 2004 and 2005, have become the weakest markets, showing 12-month negative declines of 22.8% and 21.7%, respectively. The only market that showed a year-over-year improvement was Charlotte, which saw its prices improve 1.5% over last February.
-------------------------------------------------------
I've highlighted the 2.6% month on month as those with quick brain cells or a calculator can extrapolate this to a 36% annual decline rate i.e. IF the market keeps falling at 2.6%, it will equate to a 36% fall.

Whats even more worrying is that the velocity is increasing- try plotting it out for 12 months at the current velocity - I'm sure it gets scary.

9/10 months ago, the Chicago Future Exchange was pricing a 15% fall for San Fran and 20% fall for Los Angeles, over the next 3 years.

We are there already. San Fran down 17.2%, Los Angeles down 19.4%

BTW this report is the most respected house price indicator in the US and indeed the Chicago futures are based on this 20 city index.

 

[numbercruncher]

Looks like huge changes unfolding for UKs mortgage markets, will we see the same or similar here ? If so the implications are massive ! after all Credit is the ultimate fundamental

Nationwide scraps all loans above £500,000 and demands 25% from customers with standard variable rate 'to limit its business'

The Nationwide yesterday announced some of the most dramatic changes to the mortgage market in 60 years.

The building society, the country's second largest lender, capped the amount it is prepared to lend to new borrowers at £500,000.

The Nationwide is the first major lender to do this and its decision is a worrying indicator of the state of the mortgage market.

Last year, each day about 70 borrowers took out a loan with a bank or building society for £500,000 or more.

At the beginning of April, there was no limit on the amount that Nationwide was prepared to lend.

A £1million cap was imposed on April 11 and from Thursday that figure will be halved.

In a second blow, Nationwide made the extraordinary move of limiting the number of those who can borrow on its standard variable mortgage rate.

http://www.thisislondon.co.uk/news/article-23480826-details/Nationwide+scraps+all+loans+above+£500%2C000+and+demands+25%25+from+customers+with+standard+variable+rate+%27to+limit+its+business%27/article.do

 

[Aussiejeff]

hello,

yep, and the same can be said for every blog around from s.keen, financial sense crew, GHPC, mr imber and any others

get the facts from the state revenue office, thats where you find out the sales history of a particular house,

get out and about at auctions, ofi, very few here do that

thankyou

robots

Hahaha! robots, yer killing me! Your total bias towards *BOOM TIME* is entertaining, to say the least.

I note you come from one of THE most affluent suburbs in Melbourne (St Kilda). A most desirable suburb (if you are a professional who can afford the unit prices), *only* about 6km from the CBD. Obviously, transport costs would be minimal compared to someone living out further, say, at Sunbury (which is a mere 33km to the NW as the crow flies). Hmmm, lets see how the stats stack up, shall we?

 

[Aussiejeff]

Referring to my previously posted graphs and stats..

Firstly, the Median Property Trends for Houses and Units in the 12 Mths to April 2008 -

House Auction Clearance Rates - St Kilda (83%), Sunbury (34%)
Days on Market - St Kilda (48), Sunbury (117)
Suburb Graph Trend - St Kilda (UP) v Sunbury (DOWN)

Secondly, the Demographics -

Age 20 to 39 - St Kilda (52%), Sunbury (29%)
Never Married - St Kilda (59%), Sunbury (29%)
Professional Job - St Kilda (18%), Sunbury (7%)
Working (not school) - St Kilda (82%), Sunbury (70%)
Car drive to work - St Kilda (24%), Sunbury (30%)
Ferry/Tram to work - St Kilda (9%), Sunbury (0%)
Walk to work - St Kilda (3%), Sunbury (0%)
House dwelling - St Kilda (10%), Sunbury (90%)
Flat dwelling - St Kilda (71%), Sunbury (5%)
Renting - St Kilda (57%), Sunbury (15%)
Purchasing - St Kilda (15%), Sunbury (47%)
Owner/Occupy - St Kilda (18%), Sunbury (34%)
Loan Mth < $999 - St Kilda (37%), Sunbury (62%)

Pretty stark contrast there, wouldn't you say robi? So, I don't think you can assert that what St Kilda is experiencing in the way of property sales and prices is even remotely representative of the general Melbourne region (just compare the Melbourne region stats to St Kilda's in the Demographics Lists above, if you don't believe me).

That's my $2 worth....

 

[CAFA1234]

FT -London & NY
Fall in US house prices accelerates

Interest rates have already fallen by 300bp since September, limiting some of the pain for borrowers with adjustable rate mortgages, but prospective home buyers have remained on the sidelines as prices have spiralled lower amid a glut of unsold properties.

Robert Shiller, economist and co-founder of the housing index, warned last week that the severity of the decline in residential property values threatened to exceed that of the Great Depression, when house prices dropped 30 per cent. Since its peak in June 2006, the 20-city house price index has already fallen 14.8 per cent.

The brutal blow to property values has left almost 9m US homeowners in negative equity, meaning they owe the lender more than their house is worth, according to an estimate by Moody’s Economy.com.

---------------
May you live in interesting times.

 

[gfresh]

Seems they have a large excess of supply over there..

How did this come about? Did they just start building estates with the blind hope that people would live in them? "Build and they will come". Was it investors thinking the path to riches was investment properties?

Seems they have too many properties and we have too little. Or do we?

 

[numbercruncher]

The US was building 1m homes a year for a pop of 400m , So one house being built for each 400 ppl "triggered ?" a crash.

Now look at us building 150k homes a year for 22m population. So one house being built for each 147 ppl, and about double the Interest rates and double/treble median prices relative to incomes compared with US .....

Just thought Id point that out ....

Oh and currently we have 2.4ppl per house hold, so loads of room to up average folks per household.

 

[nioka]

The US was building 1m homes a year for a pop of 400m , So one house being built for each 400 ppl "triggered ?" a crash.

Now look at us building 150k homes a year for 22m population. So one house being built for each 147 ppl, and about double the Interest rates and double/treble median prices relative to incomes compared with US .....

Just thought Id point that out ....

Oh and currently we have 2.4ppl per house hold, so loads of room to up average folks per household.

You have to make an allowance for our migration and immigration program which is creating a big demand for new homes. Add that to the trend for more "single" families and our housing construction is not keeping up with demand. Try getting a quote from a builder for a quick home build and you will see how far behind we actually are.

 

[numbercruncher]

Last year we had circa 160k migrants and 130k Aussies snuffed it.

I can only Guess at how many people left Home to go " flatting " or whatever, maybe 200k ?

Yes I understand some areas have a long wait for builders, but the 150k builds p/a roughly seems to me to be keeping with demand, Just it seems too many people want to live in the same area, but high density projects should cure that over time ?

 

[CAFA1234]

You have to make an allowance for our migration and immigration program which is creating a big demand for new homes. Add that to the trend for more "single" families and our housing construction is not keeping up with demand. Try getting a quote from a builder for a quick home build and you will see how far behind we actually are.

Have you any idea how many migrants enter the US every year - legal and illegal?

If single people can't afford a home then they will share, as they always have done.

It would help if you stated the numbers and some logical rationale for the assertion, otherwise it just gets lost along with other general comments.

 

[numbercruncher]

Heres something to ponder on the supply side, notice the amount of unoccupied dwellings has been rising over time, Id like to find the figure for last year, raises questions about demand exceeding supply (except as mentioned in specific areas, which I beleive is falsely used as the blanket debate )

 

[nioka]

Last year we had circa 160k migrants and 130k Aussies snuffed it.?

You didn't add the births ??? There are also a lot more overseas students and workers on temp visas.
If you want to put the increasing number of homeless into the figures then that is a minus but hopefully Rudd will decrease that number so it will then be a plus.

 

[numbercruncher]

You didn't add the births ??? There are also a lot more overseas students and workers on temp visas.
If you want to put the increasing number of homeless into the figures then that is a minus but hopefully Rudd will decrease that number so it will then be a plus.

Thats because Babies live at home until they are atleast 20 nowadays ( and our massive aging population is snuffing it in increasing numbers from now on, in 20 years when they are leaving home I bet more ppl die each year than are born)

But I did say that i guesstimated 200k people would leave home to go flatting each year which is all that matters for supply.

How many homeless are in Australia ?

 

[CAFA1234]

You didn't add the births ??? There are also a lot more overseas students and workers on temp visas.
If you want to put the increasing number of homeless into the figures then that is a minus but hopefully Rudd will decrease that number so it will then be a plus.

Can, and do, many OS students and temp visa people impact the house market? I understand that it creates demand in the rental market which eventually impacts the capital values, but my view is that the impact on the direct house market is minimal.

And, unless they have changed the rules, those of 457 visas can't buy property anyway as it changes their status, and therefore removes the tax breaks, and their eligibility for the visa. 457 visa are the visa of choice for professionals as the tax benefits are substantial e.g. offset full cost of rental against highest tax rate for up to 4 years!

Temp workers also tend to come and go, depending on where else they can get work and at what rates.

You really would not want to make a long term investment decision based on temp workers as their volatility is somewhat of a risk.

 

[nioka]

Can, and do, many OS students and temp visa people impact the house market? I understand that it creates demand in the rental market which eventually impacts the capital values, but my view is that the impact on the direct house market is minimal.

And, unless they have changed the rules, those of 457 visas can't buy property anyway as it changes their status, and therefore removes the tax breaks, and their eligibility for the visa. 457 visa are the visa of choice for professionals as the tax benefits are substantial e.g. offset full cost of rental against highest tax rate for up to 4 years!

Temp workers also tend to come and go, depending on where else they can get work and at what rates.

You really would not want to make a long term investment decision based on temp workers as their volatility is somewhat of a risk.

They all take up housing now and will continue to do so in the future. Whether they rent or buy it makes little difference. Anyone taking up a housing space creates a demand and if there is a shotage the price goes up. There is always someone with the money to pay even if others miss out. Most sellers are instant buyers in the market. "Deceased" sales excluded but according to recent news even those residential spaces are becoming scarce.