BentRod
ZZZZzzzzZZZZzzzzzzzz
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Save a spot for me too.
House prices to stagnate for 'years'
- Thread starter krisbarry
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hi robot
sorry i didnt understand ur post?
are you implying 18% growth on a median melb house of 420k ??
i think the worry robot will not be for the disciplined property investors.. however in this current boom there arent as many disciplined investors..
with higher IR you may see more distressed sales and if US keeps printing money as it is we may see higher rates than we would have initially expected..
many prop investors have high leveraging and variable rates... the problem will occur when many house in the same area start dropping due to servicability issues .. this will mean the bank will not lend any more money to investors as prop values are actually falling and no more equity mate.
unlike 80s when prop went thru the roof due to high IR rates and inflation, the same is not likely to happen as many have allready borrowed up to the hilt and hit servicability levels.. similar event has happened in west sydney, even though many could not imagine it only a few years back ..
instead persistently high inflation will hit debt and servicability ...
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Plus the bottom rung of the Housing Market has been taken out due to the Credit Crunch...
Sean K
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The average Melbourne house price went up $50K this year.
Can't find the ref now, it was in one of the newspapers...
Can't find the ref now, it was in one of the newspapers...
btw. my point is the very high levels of household debt are exposed to external shocks such as one that nearly eventuated ...
robot, you may personally be a smart property investor with low LVR and good servicability. The problem is not all prop investors are like you... Once they get affected the asset you are holding also gets affected (if you dont sell, it doesnt really matter) ... i not saying sell.. but im saying if you plan to buy be cautious.
bottom line being it will be difficult for resi. property to continue to perform well in a rising IR environment, when most ppl are already maxed out on debt... yes, there are micro markets that may buck this trend, but generally the market will suffer ... and in the end its about supply and demand. If investment demand dries up prices will stall (e.g. parts of syd and NSW for past few years)
robot, you may personally be a smart property investor with low LVR and good servicability. The problem is not all prop investors are like you... Once they get affected the asset you are holding also gets affected (if you dont sell, it doesnt really matter) ... i not saying sell.. but im saying if you plan to buy be cautious.
bottom line being it will be difficult for resi. property to continue to perform well in a rising IR environment, when most ppl are already maxed out on debt... yes, there are micro markets that may buck this trend, but generally the market will suffer ... and in the end its about supply and demand. If investment demand dries up prices will stall (e.g. parts of syd and NSW for past few years)
The average Melbourne house price went up $50K this year.
Can't find the ref now, it was in one of the newspapers...
fair enuf ..
do you expect the same performance to be repeated next year, and year after??
the main problem i see is inflation and higher rates ...
Sean K
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Maybe not, but I do note this thread was started in Sep 05 ...
theasxgorilla
Problem solved... next bubble.
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What qualifies as a rising interest rate environment?
8 Aug 2007 +0.25 6.50
8 Nov 2006 +0.25 6.25
2 Aug 2006 +0.25 6.00
3 May 2006 +0.25 5.75
2 Mar 2005 +0.25 5.50
3 Dec 2003 +0.25 5.25
5 Nov 2003 +0.25 5.00
5 June 2002 +0.25 4.75
8 May 2002 +0.25 4.50
5 Dec 2001 -0.25 4.25
Ask the not so obvious question...if property continues to go up in value in many parts of the country, and we have evidence which shows that interest rates have indeed been rising...what could this mean???
Spare me the obvious response which dodges the question and tries to point to the fact that interest rates used to be 10%+ etc. etc. Most realise, as you pointed out in your post, that debt levels are proportionately higher today, so its not an apples to apples comparison.
Could it be that those who are sitting on the sidelines passively commanding that property prices should inevitably stagnate or fall, are actually missing out on an opportunity at personal wealth creation by participating in the biggest economic boom in the last 100 years? How else can an economy withstand the aforementioned tightening of monetary supply and yet continue to grow, and grow, and grow and...you get the picture.
ASX.G
not all prop has gone up during IR rises.. outer syd and melb for example, many regional areas in NSW etc .. exactly right a 2% interest rate rise resulted in outer syd and melb areas being affected .. additional IR rises WILL impact more areas ...
the question is how much more IR are likely to rise, and how many areas are going to get affected ..
just because ppl arent in prop doesnt mean they arent investing .. and in fact by standing on the side i am making a decision and saying 'i am not willing to pay this price' ... if more and more people take this view as IR rise then the investor demand will in fact slow down .. so yes, by sitting on the sideline i am in fact slightly impacting the market by allocating my funds elsewhere..
theasxgorilla
Problem solved... next bubble.
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Well lets not beat around the bush like has been done on this thread for the last 2 or so years...which areas exactly...suburb names would be good...and how were they affected exactly?
You see I have first hand experience with property in outer Melbourne and delta in buy price and sell price suggests it must not be one of the areas you're talking about.
for syd pick any in outer west areas... also some south, and north west... all have negative growth for last 3 years or so (i.e. less than 0% over 3 years). Theres prob a list of 50 suburbs...
also have a look at 2006 melb property guide ... there you will see numerous outer suburbs that hardly moved since 03 .. they have started moving a bit only recently - first qtr 07 .. add the negative cashflow, maintenance and insurance etc costs and you will see that in 03 it may have been better to wait than buy in outer melb or syd ...
Finally have a look at the figures for units in Syd and Melb ... again Melb has started moving so use 06 as a guide, u will see units hardly moved and in many cases even in inner-city suburbs went backwards from 03-06.
Good luck with your prop investments.. I hope to join you sometime later, when prices in my preferred areas have come down.
asxGorilla,
im NOT saying prop all over australia is going to crash, or that there is going to be a massive collapse ..
Im saying that certain parts of the property market have ALLREADY come down, and some more will continue to do so, due to rising rates and increasing inflation. Thus, the next few years will represent better buying opps in these areas than now..
I am keenly waiting for the increase of credit and increased rates to filter through. Usually it takes 3- 6 months.. hence even the august rates havent been priced into the prop market yet.
explod
explod
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In the Age today the following drops for the 12 months ending Sept 07, Dromana -13.2%, Emerald -6.2%, Keysborough 6.2%. The key here would be fuel costs to work and lack of public transport. There are a dozen other suburbs with a drop in 1 to 2% area, closer to city such as Chelsea -1.8% which would be mortgage related.
So no big deal at this stage. Interesting figures out last week from California for the month of September median house prices fell by $US50,000
At this time also the cost of fuel is being offset by the rise in our Aussie dollar.
I would contend that some dark clouds are rising and that when it does strike this huge property spike could go pear shaped very quickly IMHO.
Not being a property person it does not worry me too much, just my 2 cents
hello,
how people can seriously look at these figures produced by ABS, APM etc amazes me,
sure as an average things may exist, but on an individual situation things can be way different
thats why you have to get out there and beat a path on the ground, following auctions, private sales etc and basically only researching the numbers provided by the State Revenue Office, not many do this except the hardcore
in my area of st kilda, st kilda east, prahran, caulfield, port melbourne things have been moving for around twelve months or more, with units getting some big gains
all clear on the horizon IMHO
thankyou
robots
how people can seriously look at these figures produced by ABS, APM etc amazes me,
sure as an average things may exist, but on an individual situation things can be way different
thats why you have to get out there and beat a path on the ground, following auctions, private sales etc and basically only researching the numbers provided by the State Revenue Office, not many do this except the hardcore
in my area of st kilda, st kilda east, prahran, caulfield, port melbourne things have been moving for around twelve months or more, with units getting some big gains
all clear on the horizon IMHO
thankyou
robots
wayneL
VIVA LA LIBERTAD, CARAJO!
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Agree, housing indices are inaccurate for a few reasons, gentrification being just one. Nothing beats eyes on the ground, comparing like with like etc.
Indices are total rubbish.
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Robots get real!! Of course bloody property in those areas will never go down. GEES
In fact if youy can afford to buy and live in those areas why even bother posting on this thread!!!
wayneL
VIVA LA LIBERTAD, CARAJO!
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Because he's an industry VI. It's in his interests to ramp property.
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Well my strategy is to enter property when Interest Rates Start Dropping at the beginning of the next credit cycle, until then I'll keep getting cashed up...
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Any idea when this will happen?
hello,
please dont shoot the messenger,
surely people can comment "on the market" without always being labelled as some RE bull,
still some awesome affordable places in those areas, with plenty of run left I believe
anything with walk-up PTC is going to kill it in the future,
if I was kimo, and looking to buy something to live in over in Perth I would seriously be looking now
thankyou
robots
please dont shoot the messenger,
surely people can comment "on the market" without always being labelled as some RE bull,
still some awesome affordable places in those areas, with plenty of run left I believe
anything with walk-up PTC is going to kill it in the future,
if I was kimo, and looking to buy something to live in over in Perth I would seriously be looking now
thankyou
robots
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