House prices to stagnate for 'years'

[It's Snake Pliskin]

How about tinnyunderthebridge

rozella

Rozella,

That's not bad! This had me in stitches for a while.

Good news on the whole in one.

tinnyunderthebridge

 

[krisbarry]

Kris,

You are generalising about the knock on effect of property decreasing. There are areas that won't drop but conversely will go up. Do your research and find those gems that will make you money.

The average suburban home is state and city specific, not country wide. There are and will be big differences among the states of Australia.

Why is a market correction immanent? What is your information that compels you to say that? We still have people in need of housing, though the oversupply situation in some states has softened the market.

Yes I agree, some states/cities will do better than others. Perth for example will fair better due to the mining boom.

Although Sydney with it massive migrant intake, which should be pushing house prices higher due to demand, is instead dropping.

Now this one suprises me...Brisbane house prices have been dropping rapidly, while they are experiencing a massive boom in population. Due to retirees moving up from Sydney escaping the rat-race.

Melbourne is suffering the biggest house price drops.

Market correction is immanent due to the massive rises, far beyond wages and inflation. It is unsustanable and very unhealthy!

 

[chansw]

Probably best if I don't give too many figures, as it will just end up in more fights between you and I.

Lets just say that market corrections in some state have been seen and there will be a knock of affect felt right around Australia.

My prediction over the coming 1-3 years is a 25%-40% fall in prices on the average Australian suburban home and a 1% increase in interest rates.

Over the past 4 years most average suburban homes have risen by 100% - a market corretion is immanent

Plenty of reports have also pointed out that Australian homes are way over-priced (as much as 25%)

Kris

Let's hope that will not happen. A few years ago, a crash in the property market happened in Hong Kong. If I remember correctly, it was like 40% down. A lot of people who complained the house price were expensive (and could not afford) did not buy after the crash. Some were fear that was not the bottom but many lost their jobs. Think about the high petrol price now. More and more people will start to cut their spendings. They buy less in the department stores, try to avoid to dine out, maybe even drink less alcohol etc. What will happen next? The shops have to cut the staff if there are not enough business. If the property market here crashes, the ripple effect is huge and affect every part of the economy. Hong Kong experienced a few years deflation and many people suffered (both with and without a property). It is better to find ways to earn more rather than to hope for this type of diaster to happen. Just my 2 cents.

 

[Smurf1976]

Kris

Let's hope that will not happen. A few years ago, a crash in the property market happened in Hong Kong. If I remember correctly, it was like 40% down. A lot of people who complained the house price were expensive (and could not afford) did not buy after the crash. Some were fear that was not the bottom but many lost their jobs. Think about the high petrol price now. More and more people will start to cut their spendings. They buy less in the department stores, try to avoid to dine out, maybe even drink less alcohol etc. What will happen next? The shops have to cut the staff if there are not enough business. If the property market here crashes, the ripple effect is huge and affect every part of the economy. Hong Kong experienced a few years deflation and many people suffered (both with and without a property). It is better to find ways to earn more rather than to hope for this type of diaster to happen. Just my 2 cents.

Agreed with you there about the consequences etc. but in my opinion the boom has gone to far, too fast to avoid the nasty consequences of a boom. IMO it's a choice between high inflation (since we're talking about pretty huge wage rises to neutralize it that way) or a bust. Neither option looks good to me when the broader economic effects of either a wages surge or a property bust are considered. Hopefully I'm wrong.

 

[krisbarry]

It is better to find ways to earn more rather than to hope for this type of diaster to happen. Just my 2 cents.

Equally said, many profit in times of disaster, and I here that is not a bad/ or evil thing. It is wise to take advantage of market forces.

Many profited from the 90's crash and are now sititing on much wealth. So what is the difference this time around, nothing!

Sure it is more morally correct to earn more, I agree with that, but being morally right has sent me broke too.

 

[tech/a]

Agreed with you there about the consequences etc. but in my opinion the boom has gone to far, too fast to avoid the nasty consequences of a boom. IMO it's a choice between high inflation (since we're talking about pretty huge wage rises to neutralize it that way) or a bust. Neither option looks good to me when the broader economic effects of either a wages surge or a property bust are considered. Hopefully I'm wrong.

Has anyone considered a combination of both.

Some inflation with a rise in rates (Moderate) 1-1.5%
and an easing on property prices (Moderate) overall 8-12% over the next 2 yrs.Obviously for an average--some less some more.

All in all though not Looming economic disaster even for those over committed.
My view is much of the comment here is over reactionary,pumped by emotive attention grabbing headlines,discussion is based upon extremes.

regardless of what occures any deviation to an extreme whether that be wages,interest rates,Inflation,housing--etc etc will eventually revert to the mean.

If you continually live life waiting for extremes then youll miss the opportuinity of getting set for any extreme to happen or taking appropriate steps to avoid a negative extreme.

Kris
Ill bet your savings will be negated by other factors normalising.

People will always be able to take advantage of one extreme or another but those that wait for all extremes to coincide miss those extremes that are rarely presented.----there will always be an excuse why NOW isnt the time!!!

 

[krisbarry]

I think the wise ones will wait, not dive in like the rest just did and followed the peak of the housing boom, to realize they are over-comitted now, and on a downward slop. Oppps!

No excuse for me, just playing the market game, waiting till it drops, then pick up someone elses trash, and make it my treasure.

Very similar to the stock market I guess.

Tech/a your looking at it from a sellers point of view and I am looking at it from a buyers point of view. Opposite ends of the scales right now. Someday you will off load your properties and for that I thankyou for freeing up the market. And someday I will buy a house. Timing is critcal, both in the stock market and also the housing market.

No hard feelings!

 

[It's Snake Pliskin]

No excuse for me, just playing the market game, waiting till it drops, then pick up someone elses trash, and make it my treasure.

Yes there's nothing quite like a falling knife.

 

[Kauri]

But if you cut yourself there is always Tripeptofen...

 

[krisbarry]

Yes that will ease the pain, and I better stock up on Relenza (BTA) just incase I get the dreaded bird flu. Seems to be all the rage right now. LOL

 

[tech/a]

Tech/a your looking at it from a sellers point of view and I am looking at it from a buyers point of view. Opposite ends of the scales right now. Someday you will off load your properties and for that I thankyou for freeing up the market. And someday I will buy a house. Timing is critcal, both in the stock market and also the housing market.

No hard feelings!

Kris.
I look at it from both angles its part of what I do.
A Week ago I sold one of my properties.
Asking price was $235,000. Offer was $210,000 guess what it sold for.
I'm currently looking at a property to buy--why--Because the NUMBERS are very attractive--if you saw them and were in the position to buy youd be falling over yourself to beat me to the agent.

Will I wait---NO!

Timing is inconsequential

 

[krisbarry]

Well done on selling a property, and once again thankyou. If the numbers are great then buy it, that is your way of doing business.

My way of doing business will be to wait.

Wait for my savings to increase and wait for the potential drop in Adelaide house prices.

That way we both win...there we go, no arguments

Peace be with you!

 

[krisbarry]

Timing needs to factored into the equation for first home buyers vs existing property owners.

Existing property owners purchasing further homes have had the financial windfall of a booming housing market. Thus it makes a much smoother transition into another purchase. More capital, less financial stress.

First home buyers have not had this luxuary so timing is more essential.

We need to take advantage of the first home owners grant, and a potential downturn in the market.

 

[Happy]

In sense, timing in your purchase decision is important too.
What is the flip side of not doing it now? Property will not be available when you’ll ask for it.

But I suppose my post is in a ‘splitting hairs’ category.

 

[tech/a]

First home buyers have not had this luxuary so timing is more essential.

We need to take advantage of the first home owners grant, and a potential downturn in the market.

So taking the opportunity when you could get $12,000 and not $7,000 a few years ago was bad timing??

Dont confuse timing and affordability.

You can time things all you like but if you cant afford a purchase then timing means nothing.
If you have unlimited funds then timing is also un important as you'll buy when the numbers add up OR its want you want!

 

[krisbarry]

The first home buyers grant was $14,000 for new homes and $7000 for exisiting homes.

The better value of the 2 grants was the $7,000 option, as there were no increased building costs involved. The $14,000 option went into the GST component or the 10% increase building costs, and fees of a new housing.

Now it is $7000 for both.

I never wanted a new home so the $14,000 is irrelevant to me, but others took up the chance.

First hombuyers ususally don't have unlimted funds, so again timing is more important.

When you are as wealthy as yourself, then more options are avaliable. Thats kewl, and very much understandable.

Yet again we continue to argue...gee I am glad we live in opposite directions in Adelaide.

 

[krisbarry]

Here is the latest housing data to munch over...

Housing weakest in NSW

By Nicki Bourlioufas

05oct05

THE downturn in the housing sector was concentrated in New South Wales and Queensland, but would spread as higher petrol prices hurt homebuyers, the Housing Industry Association said today.

For August, dwelling approvals fell 20.8 per cent New South Wales, followed by a 14.6 per cent drop in Queensland.

Elsewhere, approvals were down 3.3 per cent in Tasmania and 0.1 per cent in Victoria. Rises were recorded in South Australia, up 3.0 per cent and Western Australia, up 2.3 per cent.

HIA's Chief Economist, Simon Tennent said Queenslanders faced a housing affordability crunch in the South East corner, which was magnified by much lower average household incomes than the national average. Homebyvers in NSW also faced the most expensive housing.

Across the nation, higher petrol prices and falling consumer confidence would dampen the building sector further, the HIA, Australia's peak building industry body, said.

"Nationally, it remains one of the softest slowdowns on record thanks to strong regional activity, but with mounting concerns over higher petrol prices and a clear reversal in consumer confidence, most home and renovation builders in the higher-priced cities are still bracing themselves for further weakness," Mr Tennent said.

"Our forecasts are for these consumers to continue to pay down debt and add to savings before driving the next upturn in activity in late 2006," Mr Tennent said.

"On the bright side, this period in which cautious consumers are delaying their home purchase decisions is building up demand for new housing as evidenced by near record low rental vacancies in most capital cities," he said.

The number of building approvals plunged 8 per cent in August to a four-and-a-half year low, as the March interest-rate rise hits the property market and the economy.

Building approvals across the nation fell a seasonally adjusted 8.0 per cent to 11,794 units in August, the lowest since April 2001.

August approvals fell from an downwardly revised 12,813 units in July, the Australian Bureau of Statistics said today. In the year to August, building approvals fell 11.7 per cent.

And as home owners wind back spending, the value of renovations fell 16.5 per cent to $364.7 million, the lowest level since December 2002.

Source:

http://www.theadvertiser.news.com.au/common/story_page/0,5936,16822224%5E1702,00.html

 

[markrmau]

http://afr.com/articles/2005/10/05/1128191769593.html

"We estimate that Australian house prices are 22 per cent above fair value - Sydney being the least attractive market with a 36 per cent overvaluation - and that this overvaluation will cause investors to seek alternative investments and/or sit on the sidelines."

I tried to warn family and friends over the last few years, but they patiently explained that I just didn't understand the property market. This is not good. A lot of decent people just got carried away with the hype, and may end up hurting.

 

[tech/a]

Kris.

I'd like to congratulate you on the way you have handled a fairly lengthy discussion. Both of us have presented our point of view with what I believe to be minimum personal reference.

We will at this time stand apart on some issues---actually most issues.
But even so I hope you achieve your goals.
I look forward to future discussions.

CHEERS

 

[It's Snake Pliskin]

I think the wise ones will wait, not dive in like the rest just did and followed the peak of the housing boom, to realize they are over-comitted now, and on a downward slop. Oppps!

No excuse for me, just playing the market game, waiting till it drops, then pick up someone elses trash, and make it my treasure.

Very similar to the stock market I guess.

Kris,

I found a bargain for you.

http://dailytelegraph.news.com.au/story/0,20281,16828941-5001022,00.html