House prices to keep rising for years

[theasxgorilla]

Well what do you know...according that chart house prices have been rising for years.

 

[CamKawa]

I shake my head in disbelief when I read articles like this. What a complete and total bunch of crap.

Home prices to explode, ANZ Bank predicts

Maybe the headline should read "If house prices fall, the banks are f***ed"

 

[wayneL]

I shake my head in disbelief when I read articles like this. What a complete and total bunch of crap.

Home prices to explode, ANZ Bank predicts

Maybe the headline should read "If house prices fall, the banks are f***ed"

Oz seems to be six months behind here in the sort of pronouncements that MSM/Banks are making. In other words, we were hearing the same stuff here six months ago.

fwiw

-------

The market here is just dreadful. The lowest mortgage approvals on record, and two of the largest builders in the country look to be in danger of going under. A few banks are looking a bit dodgy too.

In the development where I am living (A Taylor Wimpey development, who failed to secure finance today), houses selling like hotcakes last year for 350,000 are available to today for 250,000... if you can complete within 4 weeks.

The speed at which things have changed is astonishing.

 

[Sean K]

The market here is just dreadful. The lowest mortgage approvals on record, and two of the largest builders in the country look to be in danger of going under. A few banks are looking a bit dodgy too.

Time to buy yet?

 

[wayneL]

Time to buy yet?

Nope, the blood is not yet running in the streets, but there are some semblances of value here and there. I think it will take a couple of years to play out... then plenty of stagnation before it moves off again.

I'm happy to sit on the fence for a lot longer yet.

Re Taylor Wimpey:

http://business.timesonline.co.uk/t.../construction_and_property/article4258534.ece

From The Times
July 3, 2008
Taylor Wimpey fundraising fails
Angela Jameson and Dearbáil Jordan

Taylor Wimpey, Britain's largest housebuilder, left the way open for a firesale yesterday after it failed to raise nearly £500 million of fresh funds.

The housebuilder, which completed more than 20,000 homes last year, said that it could not rule out a sale of the business as its share price slumped 42 per cent to 35p. Peter Redfern, the chief executive, said: “There has been a significant fall in the share price, but there are lots of options available to us.”

 

[pepperoni]

I don't have one of real house prices (i.e adjusted for inflation), but here is one of true house prices. ABS vs Case Shiller Index :



It still needs to be indexed properly - but you get the point. Depending upon the dataset you get, I believe Australian property has had much bigger gains than the US which is not evident in the above data.

Oh god yes we have had the biggest boom in the westrn world IMO.

Nobody was seriously booming during the early part of ours. I was in the us for a bit at the time and it was flat. And you could buy a house in malibu with a view for less than the same house on the northern beaches.

Re that ANZ article .. never say never ... I think there will be falls but Im not aware of all factors.

EG ASX looks like it might go even lower today ... if it doesnt recover soon Im not sure if that will hurt houses through a wealth effect or if more investment funds will go towards houses.

You only need another 2-5% of people in the market desperate to park their money to have an impact.

I think its safest to buy now at the odd reasonable or firesale price .. im trying to.

 

[Pommiegranite]

Oz seems to be six months behind here in the sort of pronouncements that MSM/Banks are making. In other words, we were hearing the same stuff here six months ago.

fwiw

-------

The market here is just dreadful. The lowest mortgage approvals on record, and two of the largest builders in the country look to be in danger of going under. A few banks are looking a bit dodgy too.

In the development where I am living (A Taylor Wimpey development, who failed to secure finance today), houses selling like hotcakes last year for 350,000 are available to today for 250,000... if you can complete within 4 weeks.

The speed at which things have changed is astonishing.

I agree.

I have also seen first hand the problems which are facing builders. One has already gone under (Beechwood). The simple fact of the matter is that project homes are going up in price due to increasing costs, whereas the second hand house market is lagging/falling. This difference is increasing weekly. It is inevitable that many builders will go out of business.

I will start with putting my money on Henley. Aren't they owned by Barratt homes (UK)?

 

[professor_frink]

Nope, the blood is not yet running in the streets, but there are some semblances of value here and there. I think it will take a couple of years to play out... then plenty of stagnation before it moves off again.

I hope your right. I want to be in a position to pick myself up a nice waterfront if the **** hits the fan good and proper, and I certainly won't have the current mortgage paid down enough in 6 months to do it. Give it 2 years though......

 

[CamKawa]

EG ASX looks like it might go even lower today ... if it doesnt recover soon Im not sure if that will hurt houses through a wealth effect or if more investment funds will go towards houses.

Some speculation is going the other way, saying that margin calls are causing investors to offload other investments, including property, to cover the call.

You only need another 2-5% of people in the market desperate to park their money to have an impact..

That's what they said about gold when it got to $1000 predicting it could soon reach $4,000 - $6,000. While it has risen in the last week it's still short of those forecasts.

I think its safest to buy now at the odd reasonable or firesale price .. im trying to.

Catching a falling knife and bottom picking are dangerous investment strategies. I think that waiting for the market to recover and then buy with confidence that the house will appreciate may be a better way to go.

 

[pepperoni]

Some speculation is going the other way, saying that margin calls are causing investors to offload other investments, including property, to cover the call.


That's what they said about gold when it got to $1000 predicting it could soon reach $4,000 - $6,000. While it has risen in the last week it's still short of those forecasts.


Catching a falling knife and bottom picking are dangerous investment strategies. I think that waiting for the market to recover and then buy with confidence that the house will appreciate may be a better way to go.

All good points.

Ill still buy if I can though happy in the knowledge that Im buying at somewhat less than peak. But with transaction costs the way they are this time Im looking for just the right place to rent OR live as Ill need to hold just about forever.

Im a huge bear .... but with a raging case of "impending bull" paranoia.

 

[Go Nuke]

Ill still buy if I can though happy in the knowledge that Im buying at somewhat less than peak.

Aren't you concerned that on the graph above that Australian house prices are likely to follow in the same footsteps as whats happening in the U.S. now?

Perhaps worse so because while the Fed has been cutting rates in the U.S, our Mr Stevens is looking hard at raising rates.

It will probably go back to something like the 80's where rates where what..15+ %...but people (probably like myself) will still buy houses.

*Personaly, I don't think Robots sounds like a man who is doing it tough atm. No offence Robots, but i get the feeling your a little out of touch with the lower/middle income people around here

Though eveyones opinion is worth while listening too..and I respect that!

 

[Tysonboss1]

I'm a renter at the moment, got lots of spare money each week.. However if I was a property owner right now I would probably be suffering under rising food prices, interest rates, petrol prices and everything else that everybody is whingeing about. I can easily cop another 30% rise in rent and still be much better off than my property owning friends..

But time catches up with renters, your rent will rise with inflation indefantly, where as the home owners weekly payments will stay pretty much the same there fore decreasing with inflation over the years, home owners also end up living rent free once the loan is cleared, all the while the renters rent keeps climbing,

You are probally paying the same in weekly rent today as what the people who bought 5 years ago are paying on loan repayments, and in 5 or 7 years time the amount your rent has increased to would probally easily cover the loan repayments had you bought in now.

 

[kingbrown]

Commercial land rats trying to jump the off the Titanic

This Contradicts the ANZ today
I think this is more of reality then spin

Todays Australian :

Commercial sales plunge

SALES of commercial property around the country fell 60 per cent to $3 billion in the first six months of 2008, plumbing depths not seen for 15 years, according to research from agent CB Richard Ellis.

At the same time, more buildings are pouring on to the market in the wake of the credit crisis, with analysts estimating anywhere between $12 billion and $20 billion worth of Australian property is for sale.

And expect things to get worse.

"Buyers appear reluctant to commit at this time, uncertain whether prices may fall further on the back of an increasing cost of borrowing," CBRE Research executive director Kevin Stanley said.

"Given the higher cost of borrowing and the nervousness of banks, achieving viable purchases may require yields to be significantly softer still than the current industry estimates."

Agent Jones Lang LaSalle is of a similar opinion. It reported a first-half sales tally of $2.85 billion, down from $6.51 billion a year ago. "There has not been a single investment-grade deal done this year in Sydney," JLL head of capital markets John Talbot said.

more here
http://www.theaustralian.news.com.au/story/0,25197,23959319-25658,00.html

Finally people are starting to see the insanity that has gripped our property market and in particular the immense gains of the commercial sector

 

[theasxgorilla]

All good points.

Ill still buy if I can though happy in the knowledge that Im buying at somewhat less than peak. But with transaction costs the way they are this time Im looking for just the right place to rent OR live as Ill need to hold just about forever.

Im a huge bear .... but with a raging case of "impending bull" paranoia.

At least you're honest!

 

[robots]

But time catches up with renters, your rent will rise with inflation indefantly, where as the home owners weekly payments will stay pretty much the same there fore decreasing with inflation over the years, home owners also end up living rent free once the loan is cleared, all the while the renters rent keeps climbing,

You are probally paying the same in weekly rent today as what the people who bought 5 years ago are paying on loan repayments, and in 5 or 7 years time the amount your rent has increased to would probally easily cover the loan repayments had you bought in now.

hello,

yes great paragraph,

still so much choice when looking at prop to buy across numerous price brackets, 200k up to 20mil, australia wide

something for everyone in there, who knows what will happen in the future,

many seem to think the shortage will underpin it all, many are taking advantage of this in the rental market with bunk beds sold out at Harvey's joint,

thankyou

robots

 

[Pommiegranite]

hello,

yes great paragraph,

still so much choice when looking at prop to buy across numerous price brackets, 200k up to 20mil, australia wide

something for everyone in there, who knows what will happen in the future,

many seem to think the shortage will underpin it all, many are taking advantage of this in the rental market with bunk beds sold out at Harvey's joint,

thankyou

robots

Thats irrelevent if people can't get credit for those properties.

It's rapidly becoming a buyers market where buyers can't afford to buy.

 

[robots]

Thats irrelevent if people can't get credit for those properties.

It's rapidly becoming a buyers market where buyers can't afford to buy.

hello,

and thats clearly not the case

thankyou

robots

 

[gfresh]

You are probally paying the same in weekly rent today as what the people who bought 5 years ago are paying on loan repayments, and in 5 or 7 years time the amount your rent has increased to would probally easily cover the loan repayments had you bought in now.

Not sure about 5 years ago (was no position to do so), however I'm still paying a lot less in rent than the people I know who have bought 3 years ago are paying in repayments - in their early 30's, as the only time they could afford to buy.

They are also paying a heck of a lot more than their comfort zone if they didn't fix their loan back then for long period. Most didn't believe interest rates could ever reach current levels so quickly, so they didn't. Most can't even afford to have children because the cost of their mortgage is too high. This is a very disturbing trend for the country.

Anyhow, I'm fine at the moment, and my rent is much less than the interest would be swallowing at a 9.4% in this current climate. Instead my deposit is earning me 8% right now which is being added to weekly. I'm going forward, many newer entrants are going backwards right now, just hoping for the better times.

I will be buying, when the time is right. To be totally honest, about 3 years ago I had the common sense to see/read house prices were getting beyond people's true affordability, and have waited it out. I'm 100% confident I've made the right decision there.

I understand the points made there longer term, and I'm not a property bear at all (I actually own 1/3 a property in Melbourne, to be sold soon). Just recently, greed and fear have taken over from rationality.

 

[Pommiegranite]

hello,

and thats clearly not the case

thankyou

robots

It is all over the Western suburbs of Melbourne. The number of houses for sale and rent are increasing.

Houses are taking at least twice as long to sell as at the beginning of the year (from communications with numerous RE agents!.

I sold earlier on in the year (Febraury, and fell through due to no FIRB approval) and I had no shortage of offers within 2 weeks of listing.

I have just resold the same property at a reduced price, and it took closer to 2 months to get a half decent offer.

 

[theasxgorilla]

It is all over the Western suburbs of Melbourne. The number of houses for sale and rent are increasing.

This happened during the last slow patch from 02-05 (roughly). Should one reasonably expect the western suburbs to be upstanding during soft patches?