House prices to keep rising for years

[Tysonboss1]

Now explain to me how immigration is going to help with the current prices?, I do not think so, this is happening so demand is less now and supply is increasing by the day.

WBII

Is this said person living on the street, or is he occuping a property.

If he is living on the street then it's true, he has no effect on the housing demand, however if he is renting he is there fore taking a house that would otherwise be available to rent or sell to some one else. so he is adding pressure both to rental prices and eventually through incresed rental yeild he is adding preasure to prices.

 

[wayneL]

Is this said person living on the street, or is he occuping a property.

If he is living on the street then it's true, he has no effect on the housing demand, however if he is renting he is there fore taking a house that would otherwise be available to rent or sell to some one else. so he is adding pressure both to rental prices and eventually through incresed rental yeild he is adding preasure to prices.

You forgot to factor in physical supply. If one extra house is added to supply, his net effect is neutral...

...except for adding to urban sprawl.

The other factor is that if things get too bad, folks will emigrate, reducing demand.

The picture is far more complicated than "immigration immigration!".

 

[robots]

You forgot to factor in physical supply. If one extra house is added to supply, his net effect is neutral...

...except for adding to urban sprawl.

The other factor is that if things get too bad, folks will emigrate, reducing demand.

The picture is far more complicated than "immigration immigration!".

hello,

where's the complication?

a. a look on RE.com.au shows plenty of affordable homes are available world wide

b. camkawa has identified plenty of places are available to rent with various asking prices

c. aus has very low unemployment so plenty of jobs going

no complications I would say, people dont have to invest in RE, shares, art etc

they can spend all of there money or shove it all under the bed

great discussion though, keep it all coming

thankyou

robots

 

[wayneL]

hello,

where's the complication?

It's in erroneous conclusions drawn from incomplete data.

Over here, the property bulls have been bleating about immigration, small island, undersupply, good economy, blah tiddily blah blah blah. Just like over there.

Yet prices are crashing around our ears.

People forgot to factor in the real factors... like credit supply, empty stock, emigration, sentiment and a whole host of things. The true picture is than in most areas, there is an oversupply of housing. It showed up as turnover dropped off.

Think about that one.

 

[theasxgorilla]

The picture is far more complicated than "immigration immigration!".

Too true. Although its a factor in the immediate term...not all immigration is the same. Unskilled immigrants don't really have an immediate impact that same as someone who turns up with a lot of money ready to slap down their hard earned for a piece of the so-called 'great Australian dream'. However, in the longer term, immigration has a more remarkable effect. A lot of the people we've been competing with for housing during the last decade or so are the children of the first generation immigrants. They've had all the opportunities as the rest of the Australian population...and this has made a difference IMO.

 

[wayneL]

The most hilariously bullish website in the world:

http://www.brunopow.150m.com/website/

Let it download and scroll all the way down... ROTFLMAO

(BTW STR = Sell To Rent)

 

[kotim]

The chickens will come home to roost. Don't forget never before in history have people who made so much money in property been able to access that unrealised profit and use it for whatever. An awful lot of people invested in the stock market on margin with the equity in their properties and effectively anyone who has invested in Shares since 2005 is underwater.

People can only take so much pain, you can never ever avoid the bigger the gain the bigger the pain that follows. Certainly history has shown that all good things must come to an end, even if only temporary in the scheme of things.

Our whole system is debt based on the advancement of credit. All our currencies are actually debt based instruments, the Banks do not lend money, they EXTEND credit. IN a credit based society you have something that is not worth much at the bottom in terms of tangibles that ultimatley is passed around and extended upon time and time again so that in effect the current money system is an inverted pyramid.

In other words the largest layers at the top, which means the removal of things at the top do not show up obviously at first becasue the hgiher the level of layers the more in the layer, so pulling down that layer means that the removal of a higher level takes longer at first because it is made up of a greater number but has the same height.

America and the rest are ultimatley all about the lack of real value that underpinned the vast extension of credit. When the going is good people don't look at why they jsut wanna be in on the action.

The system is what it is, no more no less. Think of the tide, the tide can move quite a lot before people who are not actively watching whether the water is coming or going, but sooner or later when the movement is large enough it becomes obvious even to those who aren't going out of their way to look. At this point it is too late.

We are almost at that point now.

What people forget is that we walk into the financial adviser and they punch in a heap of figures and out comes the result. The resuls shows some potential painful moments along the way, but ultimatley it is a winner and people only see the result, but in real life when they actaully have to experience some of that pain, they can no longer see the result becasue it is ultimately hypothetical and the pain is NOW.

Anyway it is always good for idle discusion because talk is cheap and that includes my talk.

 

[Pommiegranite]

The most hilariously bullish website in the world:

http://www.brunopow.150m.com/website/

Let it download and scroll all the way down... ROTFLMAO

(BTW STR = Sell To Rent)

Bloody hell Wayne. How on earth did you come across this gem?

Just out of interest, did you see the guy from housepricecrash.co.uk a couple of days ago on the BBC, being interviewed by Declan?

There was a time when the BBC would never have interviewed someone from such a website.

 

[explod]

People can only take so much pain, you can never ever avoid the bigger the gain the bigger the pain that follows. Certainly history has shown that all good things must come to an end, even if only temporary in the scheme of things.

What people forget is that we walk into the financial adviser and they punch in a heap of figures and out comes the result. The resuls shows some potential painful moments along the way, but ultimatley it is a winner and people only see the result, but in real life when they actaully have to experience some of that pain, they can no longer see the result becasue it is ultimately hypothetical and the pain is NOW.

.

Excellent post Kotim, refreeshing to get some new intelligent input.

Hope you drop into the "Immenent And Servere Market Correction" thread also.

With no disrespect to other fine posters, just good to see new blood on our forum.

 

[wayneL]

Bloody hell Wayne. How on earth did you come across this gem?

Just out of interest, did you see the guy from housepricecrash.co.uk a couple of days ago on the BBC, being interviewed by Declan?

There was a time when the BBC would never have interviewed someone from such a website.

Yes I saw it. Somebody even recorded it (hat tip to http://thecrownblogspot.blogspot.com/
):


I love the look on the face of the woman from Savilles. LOL

 

[Temjin]

Yes I saw it. Somebody even recorded it (hat tip to http://thecrownblogspot.blogspot.com/
):


I love the look on the face of the woman from Savilles. LOL

Hehe I love the word used, "economic realism!!!". People just can't seem to "grasp" the truth because it has never happened in reality. (note: reality as in THEIRS, everyone have their own definition of reality)

Though the interview was toooo short to really convince any of those out there and would still largely dismiss him as a lunatic. That's including the interviewer who obviously seem to be in disagreement with him based on how his way of questionings (skeptical) and laughing at the website name.

OHhh, and yes WayneL, love that site, but I am actually skeptical if the author of the website really meant it. haha I'm pretty sure even most of the hardcore bulls would avoid siding with that lunatic.

 

[wayneL]

OHhh, and yes WayneL, love that site, but I am actually skeptical if the author of the website really meant it. haha I'm pretty sure even most of the hardcore bulls would avoid siding with that lunatic.

Bruno is well known around the UK property boards... and yes, there are real concerns about his sanity.

 

[professor_frink]

An awful lot of people invested in the stock market on margin with the equity in their properties and effectively anyone who has invested in Shares since 2005 is underwater.

Hi kotim,

just wondering how you came to that conclusion? My index data shows the XJO top in 2005 to be around the 4965 level, and as far as I'm aware of, it isn't below that now. And that's not taking into account 2 1/2 years worth of dividends. So how are they underwater

 

[Tysonboss1]

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.

.

The houses that I Bought when I was first starting out in property back in 2002 are now all positve geared, The first one i bought was for $218,000 getting $250 / week rent, It is now getting $410 a week rent. It's a similar story with most of my others they are all at varying levels heading towards positive territory.

Now I rent myself because the I don't wish to invest in the area where I live, but if I had purchased that property to live in people at the time could have said to me " why pay so much in loan repayments when you can rent it for only $250/week". Statements like that are very short sighted....

As you can see the rent will climb indefinantly from both inflation and increased demand for that patch of land, where as the repayments are pretty much capped and actually decrease with inflation as your pay rises year by year.

Yes interest rates can go up in the short term, but the will also eventually go down. and if you fix your loan you can give yourself more security.

 

[Tysonboss1]

You forgot to factor in physical supply. If one extra house is added to supply, his net effect is neutral...

Sort of,.. but there are other factors, such as....

Total number of dwellings can increase, By knocking over houses and building back units, there fore increasing supply of units, but decreasing supply of house and land homes,.... so while the total number of dwellings increases, supply of houses and land may be contracting therefore even if total dwelling / tenant ratio remains the same prices of land will increase with density increases.

So the inner city suburbs that remain at low density will attract a premium price from those high income earners willing to pay $1M+ to live there, while the lower income areas will be built out with apartments increasing the price / square metre of land there too.

Failing to recognise this is a key fault people make by making assumptions on house prices by comparing the number of dwellings coming to market, and also comparing house prices with incomes.

Saying things like "there are more and more dwellings being built, so house prices should be going down", Is just flawed thinking.

As is saying things like "Houses prices will be limited by peoples income", as cities grow there will be more and more high income earners competing for a smaller and smaller amount of houses due to large number of suburbs being built out with high density, 1 family might not be able to afford $2.3M for a 3 bed home and land But 20 families can afford it after a developer has built 20 units on it and sells the units/ homes to twenty families.

 

[Pommiegranite]

Sort of,.. but there are other factors, such as....

Total number of dwellings can increase, By knocking over houses and building back units, there fore increasing supply of units, but decreasing supply of house and land homes,.... so while the total number of dwellings increases, supply of houses and land may be contracting therefore even if total dwelling / tenant ratio remains the same prices of land will increase with density increases.

So the inner city suburbs that remain at low density will attract a premium price from those high income earners willing to pay $1M+ to live there, while the lower income areas will be built out with apartments increasing the price / square metre of land there too.

Failing to recognise this is a key fault people make by making assumptions on house prices by comparing the number of dwellings coming to market, and also comparing house prices with incomes.

Saying things like "there are more and more dwellings being built, so house prices should be going down", Is just flawed thinking.

As is saying things like "Houses prices will be limited by peoples income", as cities grow there will be more and more high income earners competing for a smaller and smaller amount of houses due to large number of suburbs being built out with high density, 1 family might not be able to afford $2.3M for a 3 bed home and land But 20 families can afford it after a developer has built 20 units on it and sells the units/ homes to twenty families.

It's all very well talking about demand and supply. It seems to be the only argument that property bulls can put forward these days.

• Macroeconomic factors need to be taken into account.
• First home buyers simply can't afford to prop up the housing market.
• There is a definite fear factor creeping in.

 

[Tysonboss1]

It's all very well talking about demand and supply. It seems to be the only argument that property bulls can put forward these days.

• Macroeconomic factors need to be taken into account.
• First home buyers simply can't afford to prop up the housing market.
• There is a definite fear factor creeping in.

Yes, but pretty much all of the "Valid" factors the bears are mentioning are short term situations, Not fundamental issues with property investment.

I have said over and over again that property investment should not be taken as a short term stratergy unless you are an expert.

My Comments were merely pionting out some of the miss conceptions people have about how property industry is affected by growth and inflation.

In my veiw there is pros to investing in property and owning a home even if there was no population growth and prices and rents "only" grew by inflation,... As I have said in the past the way I treat my property investments is as an inflation headged income stream.

 

[robots]

hello,

anybody bought a front row block for 50k yet?

thankyou
robots

 

[Mofra]

Sort of,.. but there are other factors, such as....

Total number of dwellings can increase, By knocking over houses and building back units, there fore increasing supply of units, but decreasing supply of house and land homes,.... so while the total number of dwellings increases, supply of houses and land may be contracting therefore even if total dwelling / tenant ratio remains the same prices of land will increase with density increases.

So the inner city suburbs that remain at low density will attract a premium price from those high income earners willing to pay $1M+ to live there, while the lower income areas will be built out with apartments increasing the price / square metre of land there too.

Failing to recognise this is a key fault people make by making assumptions on house prices by comparing the number of dwellings coming to market, and also comparing house prices with incomes.

Saying things like "there are more and more dwellings being built, so house prices should be going down", Is just flawed thinking.

As is saying things like "Houses prices will be limited by peoples income", as cities grow there will be more and more high income earners competing for a smaller and smaller amount of houses due to large number of suburbs being built out with high density, 1 family might not be able to afford $2.3M for a 3 bed home and land But 20 families can afford it after a developer has built 20 units on it and sells the units/ homes to twenty families.

Excellent addition Tyson, it does touch on the fact we really do not have a single housing market in Australia; we have a multi-tiered market, whereby lower demand properties in the outer suburbs (new developments where ~80%of the value is in structure) have been falling and will likely continue to fall (after outperforming other more desireable areas anyway) whilst inner city, high demand locations with access to multiple forms of public transport have bucked the major trend and many have risen faster than inflation since the credit crisis really took hold in Aug 07.

 

[nioka]

It's all very well talking about demand and supply. It seems to be the only argument that property bulls can put forward these days

From an article in a local Property guide.

" A MILLION NEW HOMES REQUIRED IN 5 YEARS"

"New research from Housing Industry confirms a requirement for almost a million new homes to meet Australia's growing population. The research considers Australia's permanent and short term immigration intake,household formation trends and demolition activity."