House prices to stagnate for 'years'

[Mofra]

If the US had spent there Trillion from the Iraq war rolling out renewable instead of desperatley seeking Oil security they could of retained there place as undisputed economic powerhouse - I just hope Australia learns from this huge error.

Big call NC. For a start, you're assuming the house of Saud (who reportedly control 10% of listed US equity wealth) would let them bypass OPEC (and not the meeting Dubya went to in Austria recently). Wonder why the majority of 911 hijackers were Saudis (like Bin Ladin) yet no repercussions were felt in Saudi Arabia?

 

[numbercruncher]

Im not certain Mofra but I suspect it has something to do with oil and Saudi "offical" cooperation.

 

[numbercruncher]

I buy for capital gain and most importantly in the not so distant future a hedge for INFLATION.

This is about the only sensible argument for continued price growth, and its a very real risk, depending on Central bank actions we could see some huge Inflation in the coming years - Its pretty scary really. Is why i like Gold.

And further I beleive the most econmically sensible way to be in Realestate (if you must) is to Rent the place you live in and Negatively gear a Investment property to reap the same tax breaks as Investors.

 

[Flying Fish]

This is about the only sensible argument for continued price growth, and its a very real risk, depending on Central bank actions we could see some huge Inflation in the coming years - Its pretty scary really. Is why i like Gold.

And further I beleive the most econmically sensible way to be in Realestate (if you must) is to Rent the place you live in and Negatively gear a Investment property to reap the same tax breaks as Investors.

Crikey how do you do that? Do you do that? Is it worthwhile if you are on the average wage?

 

[robots]

hello,

the negative gearing aspect of investment property is slowly being eroded as tax breaks are given, I dont think negative gearing counts for all that much actually

your income is what gets you through investment property, no income no chance

if your out of pocket 10k for the year then you may get 3-4k back, what about the other 6-7k, where's that come from centrelink

what happens after 6-7 years when the property becomes neutrally geared

this is why in years to come developers will not build units because investors are extremely hesitant to buy of the plan in these multi-level complexes (this has been happening for the last couple of years)

more tax breaks will be given to property investors or developers

developers at the moment are heavily involved in building boutique complexes

thankyou

robots

 

[Flying Fish]

This is why in years to come developers will not build units because investors are extremely hesitant to buy of the plan in these multi-level complexes (this has been happening for the last couple of years)
So what will they build?

 

[robots]

hello,

stats show that dwelling starts are down,

they are building more boutique complexes for owner-occupiers

so instead of a tower with 200 units they will build a tower with 50 units, exclusive etc, lifts which service only one unit

thankyou

robots

 

[Flying Fish]

hello,

stats show that dwelling starts are down,

they are building more boutique complexes for owner-occupiers

so instead of a tower with 200 units they will build a tower with 50 units, exclusive etc, lifts which service only one unit

thankyou

robots

hello robbie, i dont understand, can you put this in simple person talk?

 

[Kathmandu]

Crikey how do you do that? Do you do that? Is it worthwhile if you are on the average wage?

Pretty easy really as 75% of the rental income of the purchase will show up as extra money coming in to service debt, and of course that debt is tax deductable, unlike repayments on PPOR.


Dave

 

[Kathmandu]

This is why in years to come developers will not build units because investors are extremely hesitant to buy of the plan in these multi-level complexes (this has been happening for the last couple of years)
So what will they build?

I'd dissagree and add in what I feel Robots is alluding to.

With well off BB's wanting ti downsize I believe they will want to go to some style of "Lifestyle" retirement complex, which is upmarket and has all the trappings they are accustomed to like coffe shop's, wine bars, wood fired Pizza restaurant's, and also have on site staff to take care of certain aspects of their life.

They will still want to remain in the areas that they have frequented as well.

There is evidence of this sort of thing happenning.

Is this what you were on about Robots, or was it as simple as young urban proffessionals wanting the three bedroom house with large entertainment area in unit format.

Dave

 

[Julia]

I'd dissagree and add in what I feel Robots is alluding to.

With well off BB's wanting ti downsize I believe they will want to go to some style of "Lifestyle" retirement complex, which is upmarket and has all the trappings they are accustomed to like coffe shop's, wine bars, wood fired Pizza restaurant's, and also have on site staff to take care of certain aspects of their life.

They will still want to remain in the areas that they have frequented as well.

There is evidence of this sort of thing happenning.


Dave

Agreed. Only about a decade ago retirement villages were pretty dull affairs. These days they are right up there with the best five star resorts with indoor and outdoor pools, gyms, restaurants, bars, community centres,
tennis courts, bowling greens, etc. Plus transport for shopping and other outings. Plus complete security and emergency call buttons for onsite management. Choose from stand alone houses, or apartments. Do your own garden or have it done for you. Pretty damn attractive imo.

 

[theasxgorilla]

Agreed. Only about a decade ago retirement villages were pretty dull affairs. These days they are right up there with the best five star resorts with indoor and outdoor pools, gyms, restaurants, bars, community centres,
tennis courts, bowling greens, etc. Plus transport for shopping and other outings. Plus complete security and emergency call buttons for onsite management. Choose from stand alone houses, or apartments. Do your own garden or have it done for you. Pretty damn attractive imo.

Mine too! Gimme something to look forward to, thats what I say...sounds alright to me...finally a post to put happy thoughts back into our head on this thread...thanks Julia

 

[Smurf1976]

It is all about timeframe and perspective. Certainly over the intermediate 5-10 year horizon we can expect a strong effect upon world growth by increasing energy shortages and risng energy costs feeding into the costs of products including food.

And the rising cost of energy will feed inflation and associated energy demand destruction via reduced economic growth will lead to stagflation.

I still think that commodity countries will have a better time of things as countries are forced to re-engineer their energy infrastructure to accomodate the new energy paradigm of renewables etc. In fact later developing countries such as China, India and parts of Asia will have an advantage to some degree as their infrastructure is relatively new and may be adapted to incorporate new technologies as they are developed. Western countries infrastructure is all generally immediate post WW2 war 2 vintage and in desperate need of renewal.

Cheers

Shane

Can't argue with that. We're talking about a medium term crisis not the end of civilisation. Medium term = 20 years duration from start to end in this context.

This is a housing thread not a political / national security / energy thread so I don't want to go too far off topic but suffice to say Australia's energy policy is "leave it to the market and don't actually plan anything" which means we will take no action until there is an acutal crisis too big to ignore.

The water situation provides the best example - first we'll ignore it, then we'll try band-aid solutions quite likely involving some sort of rationing. Only when the pain gets too great will we take the plunge and begin to implement a long term plan - that's when the 20 years starts.

This does have a lot of implications for real estate investment when you think about it. Some areas will certainly do a lot better than others. Cities with food and viable energy production not too far away ought to do fairly well. Anywhere heavily reliant on tourism for its economic base with food and energy brought in from distant locations is at the other end of the scale.

 

[wayneL]

 

[Kathmandu]

And I reply with this.(3rd year in a row now) and we have a way's to get to $5,000,000 yet

Just because houses wash off some Val does not mean it is all over, look at shares, what happens?

They roar up, wash off a wad, roar up some more, wash off some more.

Houses historically do the same.

Is anyone suggesting share prices will stagnate for years or to sell those shares because of a price drop?

Some wally's always buy at the top of the market 'cause everyone else was buying, and then get in a panic when prices drop, so have a fire sale. (too bad for them)

Those that bought at the bottom have little to fear though.

Dave

 

[cuttlefish]

Property prices do stagnate for years. Rockhampton prices were flat for pretty much an entire decade after the end of the 80's property boom, and probably only started to show some life in the early 2000's. There is an abundance of land in regional area's which typically enables large developers to generate supply through large scale housing and unit developments. Development guidelines are typically less restrictive than in inner city area's of the larger Australian cities as well.

That being said, inflation is another factor to consider in all of this, as I've raised in other posts in this thread. Labour shortages and wage inflation can push up the cost of producing housing and can also push up rentals and prices. Because regional area's start from a low population base this effect can be exaggerated significantly, particularly if there is significant migration into area's as a result of something like a resources boom (or simply a flight from expensive capital city property prices). The reverse is also true when everyone leaves again when the party's over though.

 

[Kathmandu]

Property prices do stagnate for years. Rockhampton prices were flat for pretty much an entire decade after the end of the 80's property boom, and probably only started to show some life in the early 2000's. There is an abundance of land in regional area's which typically enables large developers to generate supply through large scale housing and unit developments. Development guidelines are typically less restrictive than in inner city area's of the larger Australian cities as well.

That being said, inflation is another factor to consider in all of this, as I've raised in other posts in this thread. Labour shortages and wage inflation can push up the cost of producing housing and can also push up rentals and prices. Because regional area's start from a low population base this effect can be exaggerated significantly, particularly if there is significant migration into area's as a result of something like a resources boom (or simply a flight from expensive capital city property prices). The reverse is also true when everyone leaves again when the party's over though.

Agree in part, except that I don't expect Rocky to wash of huge amount's, probably just 20%, if a crash comes along.

At the moment, I feel it's just playing catch up (ten years behind)

The population has'nt increased that much, (According to ABS) so doubt that there will be an exodis when the coal stop's (in 10/20 years???) Mackay may well be different.

And there is a shortage of easily built on blocks in the area, so there is in fact a land shortage (of sort's) in Rockhampton (city)



Point being was don't buy at the top, and no one get's hurt

Dave

 

[numbercruncher]

Great little article here supporting continued house price deflation in the medium term because of the baby boomers houses flooding the market over the coming years/2 decades, written using the New Zealand market specifically but we have virtually the same boomer ratio.

I think youll find the concept and reasoning hard to argue against.

The House Price Crash in 2010

A thought-provoking article by Graeme Kennerley

A million dollar house sold for $450,000... sounds unbelievable? Then read on....

I want to put on public record the reasons why I predict that the upper part of the New Zealand residential property market will loose as much as 60% of its value starting around the year 2010.

It's all about demographics and, in particular, the generation of people known as the Baby Boomers. These are defined as the people born in the years following World War Two, (between the years 1946 and 1964). This generation was delivered at a birthrate four times higher than at any other time known in history.

http://www.babyboomersguide.co.nz/Articles/Will+there+be+a+crash+in+2010/The+House+Price+Crash+of+2010.html

 

[Bronte]

Great link numbercruncher ty

 

[Shane Baker]

A very simplistic article that fails to take onto account that when the baby boomers sell their large family home they have to move somewhere. Also the fact that they will invest the proceeds of the sale of their large homes to generate income. It fails to take into account that people rarely choose their housing by needs alone unless they are poverty stricken. People who can afford a better standard of accomodation often choose to simply because they can. Basic human nature. Otherwise most of us would live in 2/3 bed apartments and drive Hyundai's.

My family has had to go through this process and although quite hard on the parent initially...once they adapted to leaving the family home, they quite liked the freedom of not maintaining such a large family home. Interestingly the family home which raised five children is now filled with a "standard" family of mum, dad and two kids. Expectations have been raised over the size and quality of accomodation and people are willing to pay for the extra living space.

The article fails on several accounts;

1. It appears to assume that everyone will all sell at the same time (otherwise how will the massive oversupply occur?) when in fact people are reluctant to leave the family home and the area they have spent the last twenty or so years raising their family. The boomers are moving on but it will take at least twenty years for it to happen. In the meantime they are sitting on some of the most desirable realestate.

2. It fails to take into account that baby boomers will need to purchase somewhere to live when they sell the family home. This may generate competition for the smaller houses.

3. It fails to take into account that the baby-boomers expect to live longer and better lives than their forebears and so will stay at home as long as possible. When they do downsize, they will want to invest their excess capital. Where will they invest it? In the stock market as it is relatively liquid and can provide a regular income stream ala dividends. Doh!!! Especially since they are expecting to live longer and have learnt the value of compound interest better than almost any other generation.

In twenty years we will see who has been right. That will be when the last of the baby boomers will finally have moved through to 65. Is that when you are waiting for the bargains to appear?

Cheers and good luck waiting,

Shane