House prices to keep rising for years

[gfresh]

A recent chart from the US market via the US Census Bureau data.. even though US house prices have come down, it is still a fair bit more than 3x times the average median family income, the average for the last 40 years.

And what is our market now? 6x, 7x average family income?

 

[KIWIKARLOS]

Yeah but I'm betting that rather than massive deflation we will have large wage increases, police, truck driver, gov workers, qantas we are all fighting for between 3-5% and Im telling you now that it will happen. The NSW gov can say 2.9% cap as much as they want but when State rail strike during world youth day, cops walk out and the electricity sector grinds to a halt they will pay.

We will inflate away our problems which i think is much better because at least the pain is spread across the entire country not just us little guys who would otherwise take massive losses on our houses.

Also in the US real wages have been decreasing for 40 years. In oz we have had wage growth of between 3-10% per year for at least 5-10 years. It will continue our balance of trade is improving and our aussie dollar is buying more. Sure we could come down 10% and many places have already had falls of 30% but I don't believe we will see across the board double digit drops from where we are now.

Imigration is increasing and we will have about 250,000 new people coming here every year. Rent prices will increase and the proposed developments for new housing particularily in Sydney are 3-5 years away before any real big amount of Dwellings go up. I work for the electrical industry and our network is stuffed now, even medium scale projects take 2-3 years to deliver and the big one 5+.

 

[gfresh]

Wages can rise to match inflation, but if house prices are going up even faster, capacity to pay is getting worse. If there is a tipping point, it's when people just can't afford to put out a higher share of their weekly income into a mortgage. Even rental is not much different as a share of wages (apparently many renters are suffering very much as well, many at the 30%+ of weekly wages on rent).

As you'd know, soon as you have large wage increases, these costs get passed on, you guessed it, as higher prices. Further inflation, further weekly costs on everything else, less capacity to spend on housing.

We've also got the RBA meddling, who knows full-well a wage spiral will only lead to further inflation, and will do their darnedest to stop that happening under their current mandate. Rates will be raised further, and more will feel pain.

The UK has, or is talked about a housing "shortage" for many years. Whatever the demand, beliefs, immigration stories, etc - it still hasn't prevented house prices coming down. This shortage may still even exist, but that doesn't alter the end result - house prices have come down.

As stated before, it's highly likely immigration will slow as times get harder, as people will be poorer in their own countries, making a move to Australia un-affordable. Immigration always rises during boom times as jobs are needed, people feel like a country is an opportunity "plenty of work in Australia", etc and can likewise slow, or people even leave as times get worse.

 

[Pommiegranite]

Yeah but I'm betting that rather than massive deflation we will have large wage increases, police, truck driver, gov workers, qantas we are all fighting for between 3-5% and Im telling you now that it will happen. The NSW gov can say 2.9% cap as much as they want but when State rail strike during world youth day, cops walk out and the electricity sector grinds to a halt they will pay.

We will inflate away our problems which i think is much better because at least the pain is spread across the entire country not just us little guys who would otherwise take massive losses on our houses.

Also in the US real wages have been decreasing for 40 years. In oz we have had wage growth of between 3-10% per year for at least 5-10 years. It will continue our balance of trade is improving and our aussie dollar is buying more. Sure we could come down 10% and many places have already had falls of 30% but I don't believe we will see across the board double digit drops from where we are now.

Imigration is increasing and we will have about 250,000 new people coming here every year. Rent prices will increase and the proposed developments for new housing particularily in Sydney are 3-5 years away before any real big amount of Dwellings go up. I work for the electrical industry and our network is stuffed now, even medium scale projects take 2-3 years to deliver and the big one 5+.

Is that you Ben?

 

[Go Nuke]

(apparently many renters are suffering very much as well, many at the 30%+ of weekly wages on rent).

Easlily! Everytime we have a rate rise the rent goes up to match.So other than a renter not having to pay rates, body corp etc they are just as bad off when prices increase.

average worker wont be able to afford a can of coke will be written soon with the amount of spruiking coming out of the handout crew,

get a better job, promotion, work 2 jobs, save save save

Hmmm this sounds like a bit of an idiotic comment and one that i'm sure doesn't do your intelligence much justice Robot

And who will do the "lower paying jobs"??
Will we become like the U.K and employ the paki's to do them?
As Ive stated, we have a skills shortage and even I'm looking to get out of the trade...why..well like you suggested..looking for a better paying white collar job! Trades aren't quite cutting it anymore. But hey, I'm not whinging about it..I'm doing something about it. Skills shortage...who cares.

Let the house prices crash. i couldn't care. I'll be waiting with my deposit

 

[Pommiegranite]

Easlily! Everytime we have a rate rise the rent goes up to match.So other than a renter not having to pay rates, body corp etc they are just as bad off when prices increase.



Hmmm this sounds like a bit of an idiotic comment and one that i'm sure doesn't do your intelligence much justice Robot

And who will do the "lower paying jobs"??
Will we become like the U.K and employ the paki's to do them?
As Ive stated, we have a skills shortage and even I'm looking to get out of the trade...why..well like you suggested..looking for a better paying white collar job! Trades aren't quite cutting it anymore. But hey, I'm not whinging about it..I'm doing something about it. Skills shortage...who cares.

Let the house prices crash. i couldn't care. I'll be waiting with my deposit

Why accuse others of idiotic comments, when you set the benchmark? Renters don't pay more when they're in a fixed term contract. So the landlord has to wait before he can increase the rent. Also due to an abundance of rental accomodation in many areas (I prefer to rely on my own eyes then the press), many landlords are reluctant to take the risk of increasing rents as it could lead to a longer vacant period.

..and before you go around accusing other off idiotic comments, I'll enlighten you about your bigotted comment. As early immigrants, many 'Pakis' are well set and tend to be self employed (taxi drivers or whatever). You obviously haven't been north of the equator.

 

[Tysonboss1]

Why accuse others of idiotic comments, when you set the benchmark? Renter don't pay more when they're in a fixed term contract. So the landlord has to wait before he can increase the rent. Also due to an abundance of rental accomodation in many areas (I prefer to rely on my own eyes then the press), many landlords are reluctant to take the risk of increasing rents as it could lead to a longer vacant period.

.

Excactly right, Interest rates have nothing to do with rental increases, it's supply and demand of the properties that decides the rent price.

The only time Interest rate increases may affect rental prices are where the property has been under rented for a while, and the land lord may have his payments go up so he looks at options to raise his cashflow and after some research finds is property is under the current market rate so at the next chance will probally raise the rent to match the market.... if he is asking more than market rent then he will quickly find his house vacant.

 

[robots]

Easlily! Everytime we have a rate rise the rent goes up to match.So other than a renter not having to pay rates, body corp etc they are just as bad off when prices increase.



Hmmm this sounds like a bit of an idiotic comment and one that i'm sure doesn't do your intelligence much justice Robot

And who will do the "lower paying jobs"??
Will we become like the U.K and employ the paki's to do them?
As Ive stated, we have a skills shortage and even I'm looking to get out of the trade...why..well like you suggested..looking for a better paying white collar job! Trades aren't quite cutting it anymore. But hey, I'm not whinging about it..I'm doing something about it. Skills shortage...who cares.

Let the house prices crash. i couldn't care. I'll be waiting with my deposit

hello,

thats right, paki's, indians whoever and people will be racking them up on bunk beds in the rental, creaming it

already happening, as you know bloke in melb had 50 in his house, $100/wk a pop, very good,

most landlords will not renew a lease after the initail term now as it gives the landlord the freedom to jack'em up high regularly, surely one has to get the best possible outcome on his investment

thankyou

robots

 

[Go Nuke]

As early immigrants, many 'Pakis' are well set and tend to be self employed (taxi drivers or whatever). You obviously haven't been north of the equator.

Actually I have been north of the equator.
Ive Been to the U.K and i hear all about the Paki's over there.
Find me some poms that have something nice to say about them?

I'll enlighten you about your bigotted comment.

Is it...awww Gee even Robots agree with my termanology on that one lol.

already happening, as you know bloke in melb had 50 in his house, $100/wk a pop, very good,

Is that good Robots? Sounds borderline like "exploitation" to me.

Someone in QLD was doing the same. Oh thats right,it was some asian people living on the Southside packing the students in like sardines. They came unstuck because there was insufficient toilets for that many people to live in one dwelling.

Excactly right, Interest rates have nothing to do with rental increases

I'm sorry but as a landlord myself I can't agree with that comment.
As interest rates increase, landlords do put the rent up to cover the increase in their morgage repayments.

 

[pepperoni]

Article confirming what ive been seeing .... although I think blind freddy could see it.


http://www.domain.com.au/Public/Art...head south, north and east&s_rid=smh:Homepage

 

[Tysonboss1]

I'm sorry but as a landlord myself I can't agree with that comment.
As interest rates increase, landlords do put the rent up to cover the increase in their morgage repayments.

As I said this can only happen if you have been under renting your property in the first place, then get a shock and raise the rents back to market rent,

If you try to rent it higher than market rent without any added incentives then it will become vacant, or attract troublesome tenants who only accept the above market rent because no one else will rent them a house.

 

[wayneL]

As I said this can only happen if you have been under renting your property in the first place, then get a shock and raise the rents back to market rent,

If you try to rent it higher than market rent without any added incentives then it will become vacant, or attract troublesome tenants who only accept the above market rent because no one else will rent them a house.

Yes,

As the UK market collapses around our ears, some interesting things are happening.

Mortgage rates are increasing.

In a small minority of areas, parts of London mainly, rents are rising as rental demand increases relative to supply and LLs try to cover costs.

In the vast majority of the UK however, rents are stagnant or falling. LL's attempted to raise rents earlier this year in response to interest rate rises, only to be laughed at by tenants. In most of the UK, there is a massive increase in supply as folks unable to sell their overpriced pile of crap put it up for rent.

Some try to put them on at rates that will cover their mortgage, but these of course just sit there... until the muppet realizes how markets function.

In my IP area, rents have been stagnant for quite some time. Where I am living (Cheltenham) rents are falling.

 

[robots]

hello,

no its not expoiltation, it may be all they can afford so the landlord is offering affordable accommodation for society,

not to dissimilar to when you buy a house, you buy what you can afford and just that,

for several years now everybody thinks a Toorak or Point Piper mansion should be the same price as a 1-bed flat in Liverpool or Werribee

and with manipulative use of charity organisations individuals have used the media to spruik the "afforability" crisis to line the executive(?) pocket, and as such brainwashed the poverty pack

thankyou

robots

 

[wayneL]

hello,

no its not expoiltation, it may be all they can afford so the landlord is offering affordable accommodation for society,

not to dissimilar to when you buy a house, you buy what you can afford and just that,

for several years now everybody thinks a Toorak or Point Piper mansion should be the same price as a 1-bed flat in Liverpool or Werribee

and with manipulative use of charity organisations individuals have used the media to spruik the "afforability" crisis to line the executive(?) pocket, and as such brainwashed the poverty pack

thankyou

robots

Nonsense,

Nobody could possibly that asinine, surely you must be trolling. Nobody is that stupid.

 

[motion]

Something has to give, I have been attending auctions for the past 6 weeks looking at the market and most places are not being passed in or going into talks about with the highest bidder at the end.

I think people are still buying but are looking for a bargain. The places I'm referring to are all with a 10km limit of the city so it's interesting times ahead.

I think if you are buying your family home then you can never go wrong in a market like this but as an investment you might have some issues if the market runs the other way which is down... it's all a little unknown at the moment...


Great thread guys... Just my food for thought !

 

[Temjin]

I'm sorry but as a landlord myself I can't agree with that comment.
As interest rates increase, landlords do put the rent up to cover the increase in their morgage repayments.

Sorry, it's a myth that rent goes up along with interest rate rises. A picture speaks a thousand words, but here is a couple of charts that would probably make a thesis out of it.

Note that the "real cost of rent" is used below, not NOMINAL rent.

(Source: RBA, APM June newsletter, Abelson 2004, ABS)

 

[Pommiegranite]

Sorry, it's a myth that rent goes up along with interest rate rises. A picture speaks a thousand words, but here is a couple of charts that would probably make a thesis out of it.

Yes, but there are many landlords like the one you are replying to, who are not only woefully lacking in an understanding of basic economics, but are also stubborn too boot.

These landlords will be the first to feel the pain, followed by a lot of head scratching and questions to themselves asking "what went wrong?".

This will be quickly followed by feeble attempts of finding someone else to blame i.e Kevin Rudd, renters, the RBA, the Chinese, REAs etc etc.

It really is laughable.

 

[pepperoni]

Something has to give, I have been attending auctions for the past 6 weeks looking at the market and most places are not being passed in or going into talks about with the highest bidder at the end.

I think people are still buying but are looking for a bargain. The places I'm referring to are all with a 10km limit of the city so it's interesting times ahead.

I think if you are buying your family home then you can never go wrong in a market like this but as an investment you might have some issues if the market runs the other way which is down... it's all a little unknown at the moment...


Great thread guys... Just my food for thought !

+1.

 

[pepperoni]

Sorry, it's a myth that rent goes up along with interest rate rises. A picture speaks a thousand words, but here is a couple of charts that would probably make a thesis out of it.

Note that the "real cost of rent" is used below, not NOMINAL rent.

(Source: RBA, APM June newsletter, Abelson 2004, ABS)

Great charts ... I get tired of the old "Ill just jack up my rents" BS round here .. there is sufficient supply and a limit to what people will pay.

Update on rents in mosman/cremorne ... I saw a 2 bedder on cremorne point with parking for $340 last week ... and heaps of rentals available ... its like rents are falling back below that spike this year if anything.

 

[Temjin]

Yes, but there are many landlords like the one you are replying to, who are not only woefully lacking in an understanding of basic economics, but are also stubborn too boot.

These landlords will be the first to feel the pain, followed by a lot of head scratching and questions to themselves asking "what went wrong?".

This will be quickly followed by feeble attempts of finding someone else to blame i.e Kevin Rudd, renters, the RBA, the Chinese, REAs etc etc.

It really is laughable.

Agree.

It's understandable because they are in the business and it is in their best interest, both financially and psychologically, to have a biase for anything that can affirm their believes and the decisions they have made so far.

It is fairly difficult for anyone to openly admit they have made a WRONG DECISION after commiting so much time and money into a particular task that they truly believed in it. I can relate to them personally on some other stuff that i have done. One would need a big ego to go through all that, especially for full grown adults.

It's also human nature to blame someone else for their own mistakes. It's a flaw that I bet everyone is guilty of having done it at least once before.

And yes, criticism and pointing out one's error is one of the worst communication roadblock anyone could make to another person.

Sorry for all the psychological babbling.

As for the renting situation, there are just far too many "8 rooms in one house" style rental properties near around where I live. Most of the landlords are Asians and the properties were simply "renovated" (if you could call that!) to cater for oversea students. Loads of advertisment on them lately, with prices dropping as there are simply too much supply around.