House prices to stagnate for 'years'

[theasxgorilla]

Don't really have to go to the soup kitchen at all, just stand around any High Street queue (British people love to queue) and eavesdrop for a bit, you'll hear them.

Used to hear the same things in Oz.

Totally agree with you, but here is my recurring point. People talk about what is in the papers and on TV. And the media publishes whatever they think will get the readers reading and coming back. Its no surprise people are telling these tales. Probably not about themselves mind you, but about other people who speculated, "and now rightly deserve what they've got coming to them, damn speculators".

Here is a thought...more people read papers and watch TV than speculate. That means a great big audience out there who never participated in the boom, but watched prices go up in local real estate catalogues and probably knew someone directly or by association who sold actually sold a house recently for an extraordinary amount or heaven-forbid actually speculated and tried to make a profit. This is a feeding frenzy by all those who missed out. Wishing that those who tried to do what most didn't have the guts (or simply weren't in a position) to do indeed get what they deserve for trying. Be interesting to see if anything actually comes of it. I'm still waiting for the real thunder and rain to happen. So far, lots of talk, very little crashing.

ASX.G

 

[Tysonboss1]

Centro Properties Group down 70pc (seventy) today.....


Sign of the times perhaps ?

some money to be made here for people quick to take advantage of the market over reaction,

 

[wayneL]

Totally agree with you, but here is my recurring point. People talk about what is in the papers and on TV. And the media publishes whatever they think will get the readers reading and coming back. Its no surprise people are telling these tales. Probably not about themselves mind you, but about other people who speculated, "and now rightly deserve what they've got coming to them, damn speculators".

Here is a thought...more people read papers and watch TV than speculate. That means a great big audience out there who never participated in the boom, but watched prices go up in local real estate catalogues and probably knew someone directly or by association who sold actually sold a house recently for an extraordinary amount or heaven-forbid actually speculated and tried to make a profit. This is a feeding frenzy by all those who missed out. Wishing that those who tried to do what most didn't have the guts (or simply weren't in a position) to do indeed get what they deserve for trying. Be interesting to see if anything actually comes of it. I'm still waiting for the real thunder and rain to happen. So far, lots of talk, very little crashing.

ASX.G

Real estate doesn't "crash" like SMs. It's more insidious than that, RE crashes are only really that evident AFTER it has happened. This is why shills like Robots can carp from the side with extremely faulty logic for ages while enough happens for the real facts to become obvious.

I suspect Oz will be more resilient (at least initially) than other frothy markets, but make no mistake, in UK, RoI, Spain and of course the USA, the crash is real, it's happening.

 

[robots]

hello,

get off my back,

all I am claiming is that things are extremely sound and that is the thrust of my discussion here,

no magical logic, just what I see every weekend, properties being sold and new high prices being achieved,

in the background people may have all sorts of opinions,

but seriously, who went to an auction last weekend or really investigated what a property would/did sell for?

not long to 08

goodluck and have a merry christmas

thankyou

robots

 

[wayneL]

hello,

get off my back,

all I am claiming is that things are extremely sound and that is the thrust of my discussion here,

no magical logic, just what I see every weekend, properties being sold and new high prices being achieved,

in the background people may have all sorts of opinions,

but seriously, who went to an auction last weekend or really investigated what a property would/did sell for?

not long to 08

goodluck and have a merry christmas

thankyou

robots

Who is on your back 'bot? Just folks giving their opinion just like you.

 

[Flying Fish]

Real estate doesn't "crash" like SMs. It's more insidious than that, RE crashes are only really that evident AFTER it has happened. This is why shills like Robots can carp from the side with extremely faulty logic for ages while enough happens for the real facts to become obvious.

I suspect Oz will be more resilient (at least initially) than other frothy markets, but make no mistake, in UK, RoI, Spain and of course the USA, the crash is real, it's happening.

So maybe buy over there?

 

[wayneL]

So maybe buy over there?

Yup, but only when Kirsty Allsop thinks real estate is a crap investment.

Parody:

 

[wayneL]

This property ==>> http://www.houseprices.co.uk/e.php?q=NE1+4BB+702 (bought for £221,000 in July 2006)
Just sold at auction for £115,000

More examples to come as I find them.

 

[numbercruncher]

3rd Annual Demographia International Housing
Affordability Survey:2007

The 3rd Annual Demographia International Housing Affordability Survey expands coverage to 159
major markets in Australia, Canada, Ireland, New Zealand, the United Kingdom and the
United States. The Demographia International Housing Affordability Survey employs the “Median
House Price to Median Household Income Multiple,” (“Median Multiple”) to rate housing
affordability (Table ES-1).


Demographia Housing Affordability Ratings
Rating Median Multiple
Severely Unaffordable 5.1 & Over
Seriously Unaffordable 4.1 to 5.0
Moderately Unaffordable 3.1 to 4.0
Affordable 3.0 or Less


In recent decades, the Median Multiple has been remarkably similar among the nations surveyed,
with median house prices being generally 3.0 or less times median household incomes. This historic
affordability relationship continues in many housing markets of the United States and Canada.
However, the Median Multiple has escalated sharply in Australia, Ireland, New Zealand and the
United Kingdom and in some markets of Canada and the United States.

The most pervasive housing affordability crisis is in Australia, with an overall Median Multiple
of 6.6. Affordability is only marginally better in New Zealand (6.0) Ireland (5.7), and the
United Kingdom (5.5). On the other hand, the national Median Multiple in Canada is 3.2,
indicating that housing is one-half as expensive relative to incomes as in Australia. The national
Median Multiple in the United States is 3.7.

http://www.demographia.com/dhi-ix2005q3.pdf


Pretty good reading if anyone is interested, not sure realestate agents would like it much, they might consider it biased propaganda or something lol

In fact, the evidence shows that virtually all of the increase in housing prices has been due to the
second factor --- a shortage of land. Land prices have skyrocketed, while the price of building
houses has risen only modestly in real terms. From 1993 to 2006, 88 percent of the combined cost
of new houses and land has been attributable to inflation of land prices and only 12 percent to
inflation in house building costs (Figure 6). Between 1993 and 2006, the inflation adjusted cost of
building a typical house in Australia rose 16 percent. The cost of land for residential development
has risen more than an inflation adjusted 125 percent, approximately eight (8) times the house price
increase.13 The land price inflation is so great that none of the 90 categories surveyed for the
Consumer Price Index rose as steeply. The land price escalation was more than double the increase
in petrol costs (Figure 7). 14

 

[robots]

hello and good evening,

article in the aus paper today:



HOUSING affordability declined by almost 10 per cent over the past year, a report shows, and there appears to be little relief in sight for renters and those looking to enter the property market.

While welcoming the renewed focus on the issue of housing affordability, the Real Estate Institute of Australia (REIA), which this week released its annual summary of residential and commercial real estate markets, warned that renters and buyers alike still faced an uphill battle.

"The REIA looks forward to the introduction of the Rudd Government initiatives including the first home saver scheme, housing rental scheme, and housing affordability fund,'' REIA president Noel Dyett said.

But Mr Dyett said more needed to be done to address the affordability problem after what it said was a turbulent year for renters and buyers alike.

"The Federal Government should also consider including home ownership as the fifth pillar in the Government policy on superannuation and self-funded retirement, together with mandatory superannuation savings, voluntary savings, and aged pensions,'' Mr Dyett said.

The REIA report showed dwelling sales reached $209 billion in the past financial year - the highest level on record.

Investors and first home buyers made a tentative return to the housing market during 2006-07, although their numbers were still comparatively subdued, the REIA said.

Housing affordability declined by 8.3 per cent over the financial year, with yet another quarter where more than 30 per cent of a median family income was required to repay an average mortgage.

The REIA said rental affordability has also declined, with vacancy rates tight across the country.

"As a result, rents have increased by an average of 12 per cent during 2006-07,'' the REIA said.

The REIA said Australian Bureau of Statistics data showed that 24.8 per cent of all renters spend 30 per cent or more of their income on housing.

And with interest rates widely expected to rise again, possibly as early as February, the affordability problem is likely to worsen.

"Increasing rates is going to do nothing for helping housing affordability - that's obvious,'' Mr Dyett said.

"It very much depends on what sort of initiatives the new Federal Government comes up with.''

Mr Dyett said a large part of the housing affordability issue was the lack of supply, adding that developing initiatives that encouraged more people back into property investment would help alleviate the problem.

"And one factor that may be of significance is the current uncertainty in the share market - that may in fact encourage more people back into property investment, direct investment rather than the listed property trusts.''

He said the lack of supply of rental properties, while contributing to the housing affordability problem, may, however, also have a positive spin-off.

"Although interest rates are increasing, the scarcity of of rental properties is of course pushing up rental returns.

"The pendulum may move into a position where people think that with rents increasing, and if they're not highly geared ... they can get a reasonable return out of property and increase the supply.''


amazing situation that even after 5 IR rises, the RE in aus is at an all time high, how can that be, doesnt increasing rates decrease RE,

must be something else going on, surely a text book on this at the library

thankyou

robots

 

[numbercruncher]

Interesting stuff here ....

An estate agent is paid at a rate that is equivalent to $675 per hour, according to author and journalist Terry Ryder.

Vendor paid advertising has become something of a scam. Supposedly, a vendor pays for the advertising associated with their sale, but in reality the estate agent ends up with a share of the advertising funds

In his book "Real Estate Mistakes" consumer advocate Neil Jenman quotes notes from a course held for Melbourne real estate agents:


"The amount spent on advertising is much greater with an auction. This means extra publicity to your company."
and
"If the seller is moving interstate ask who is paying for the advertising. If it is being paid for by the company, bump up the overall advertising schedule."

and
"With a large advertising budget, the client will be loyal to you for longer. If they owe $4000, $5,000 or $6,000, taking the property away from you will mean they have to pay the advertising money owing immediately!"

http://www.lawyersrealestate.com.au/reference.asp


Probably not all that surprising but interesting none the less, sure adds alot to a propertys price !

 

[robots]

hello,

great news for fellow ASF members who might be considering a career as an RE agent,

reasonable figure considering the type of work that is involved,

thankyou

robots

 

[numbercruncher]

Yes especially considering you can become a fully fledged licensed expert after 50 hours training

 

[Julia]

hello,

great news for fellow ASF members who might be considering a career as an RE agent,

reasonable figure considering the type of work that is involved,

thankyou

robots

Robots, don't you find having to be available to everyone so much of the time gets to you? Phone calls at all hours etc?

 

[Mofra]

Im not actually hoping for anything just commentating on how I percieve the situation.

Surely you can concede most of the property boom can be directly attributed to far too cheap and easy credit ?

That in itself is an interesting kettle of fish. The ease of credit is only half the equation - the government slow release of land is one of the major factors, however we have major resi development companies with literally billions of $$$ worth of landbanks just waiting for the peak time to release. The fact that they are not releasing this land indicates they believe property prices will not be suffering from a sharp retraction anytime soon (although I personally believe mortgage belt areas, even with no % decline, will have some pullback in real terms).

Property prices on a historical p/e have averaged at 4x average earnings and now 7+x , Id have no debate in this thread if average wages where 100k rather than 50.

The spread of wages away from the mean is very different to historical figures, so perhaps higher PEs are going to form the norm? A pullback to 6x is (arguably) sustainable, an inflation could get us there in just a few years if price growth is subdued.

Good luck with your investments.

ps. I have absolutely no problem with and enjoy snapping up bargains during firesales, and surprisingly enough have positioned myself to do so .

Cheers, I'm happy with my performance.

If you are positioning for firesales, I assume you're spying on the 19 year office space supercycle ready for a shift in 08?

 

[numbercruncher]

That in itself is an interesting kettle of fish. The ease of credit is only half the equation - the government slow release of land is one of the major factors, however we have major resi development companies with literally billions of $$$ worth of landbanks just waiting for the peak time to release.

Yes I agree slow land release contributes massively, quite humourous considering the vast tracks of land we have, but still Credit is the ultimate fundamental - Just apply the borrowing standards of a decade ago to now and it would be a vastly different landscape im sure !

I wonder if these companies are waiting for the peak time to release or are fearful of supressing prices ? I read some figures on dwindling new home construction .... one would think that now considering all the International goins on, the warnings if you will , would make it the most savvy time to sell from their landbanks ?

 

[numbercruncher]

If you are positioning for firesales, I assume you're spying on the 19 year office space supercycle ready for a shift in 08?

No, but Im certainly eyeing off opportunity with Australias aging population such as trebling of the over 60s over the next few decades

 

[Julia]

No, but Im certainly eyeing off opportunity with Australias aging population such as trebling of the over 60s over the next few decades

Some bargains in retirement village companies at present, e.g. FKP.

 

[numbercruncher]

Some bargains in retirement village companies at present, e.g. FKP.

Thanks Julia - Good tip from what i Just read ....

I read a lil while back you broke a bone in you hand? All come better?

 

[Knobby22]

No, but Im certainly eyeing off opportunity with Australias aging population such as trebling of the over 60s over the next few decades

Healthcare is the most certain.