House prices to stagnate for 'years'

[theasxgorilla]

i guess someone else who can afford will buy then,

...yep, until they can't.

 

[tech/a]

"House prices are likely to stagnate across the country for many years, most likely drifting lower as wages and rents slowly catch up," said analysts Felicity Emmett and Kieran Davies at ABN AMRO.

While this makes perfect sense in the LONGTERM, while demand outstrips supply this is unlikely to occur.
As stated above this is occuring in parts of the world and in some CBD's in Australia.
Inflation is on the move.
New housing will become more expensive (estimated by some of our clients,builders and developers,to be as much as 20 % in 2008),making established more attractive.
Units and apartments will thrive where rent demand maintains a high.
Right now where I am prospective renters are out bidding each other to secure an abode.We had 60 to an open pre rent!

A balance at some point will be reached stagnation/price falls will only occur when the balance tips beyond demand exceeding supply.ie supply exceeding demand.

Initially inflation will add to the "urgency" of purchase.
In my view we are a good 12 mths away for domestic housing to take a slow down and a few years before units/apartments get a hit.---across the board.

 

[YChromozome]

I wouldn't be investing in the building's you are taking about either,... Unless you are investing in the actual developer.

How about Rhodes Waterside, just metres from Rhodes Train Station on the Northern Line . . . ?

Rhodes Waterside (Warning page contains a lot of photos)

 

[robots]

hello,

interesting article

http://www.news.com.au/heraldsun/story/0,21985,23006192-664,00.html

thankyou

robots

 

[So_Cynical]

How about Rhodes Waterside, just metres from Rhodes Train Station on the Northern Line . . . ?

Rhodes Waterside (Warning page contains a lot of photos)

Its a nice development...didn't it used to be the union carbide site
the 1 with toxic dioxins in the soil and river bed..i think there still
treating the soil at the northern end of the area.

http://www.smh.com.au/articles/2002/06/03/1022982671118.html

 

[Tysonboss1]

And your point is??

that just because some areas are snoozing doesn't mean that the property market in other areas isn't a good investment.

 

[Tysonboss1]

How about Rhodes Waterside, just metres from Rhodes Train Station on the Northern Line . . . ?

Rhodes Waterside (Warning page contains a lot of photos)

I am not familar with that development,... I live and work in chatswood.

However my property investments are in Brisbane mostly,..

I tend not to invest in trophy properties, such as luxury apartments. If I did invest in sydney it would be some where with a high land content.

I would probally invest on the central coast more than sydney though because that is where my stratergy will have he highest success rate.

 

[professor_frink]

that just because some areas are snoozing doesn't mean that the property market in other areas isn't a good investment.

I'm still not sure why you needed to address me when you made that comment. I didn't even come close to saying my local was how the entire market is going. The first part of my post yesterday started with me saying that I thought the article that got this thread going was generally wrong.

If I was a property investor, I'd be looking around for a few rentals here. Whilst my area has been pretty quiet the last few years, I think there is some great buying at the moment. I'd have no troubles getting 5%+ gross yield on the house I just bought, and with a couple of minor improvements, could get a fair bit more. Almost as good as a banking stock at the moment

 

[noirua]

I can't say I'm at all confident about property prices and ask whether it's worth taking a risk in a sector that looks increasingly in a worldwide recession.
Banks look increasingly unhappy about lending to anyone that's not a solid bet in financial terms.
A sector to keep out of in 2008, imho.

 

[YChromozome]

I can't say I'm at all confident about property prices and ask whether it's worth taking a risk in a sector that looks increasingly in a worldwide recession.
Banks look increasingly unhappy about lending to anyone that's not a solid bet in financial terms.
A sector to keep out of in 2008, imho.

I can't agree more, considering Housing in Australia is in the biggest bubble we have ever seen. Biggest bubble plus recession doesn't look like a good mix either.

Sure some people talk about demand outstripping supply as a means to justify the bubble, but they were also saying this in the US in 2006.

 

[numbercruncher]

I dont even buy the demand outstripping supply argument, just check out available rentals on realestate.com.au, squillions of places for rent, only shortage is in certain suburbs , but the realestate lobbyists use that as a blanket argument of shortages everywhere which is just false/misleading.

Sydney is jumping on the Urban consolidisation bandwagon adding Inventory, Labor has promised to address the issue etc ... If everyone wants to live in CBDs let them, just whack up massive highrises, too easy.

 

[robots]

hello,

much money went into direct property 12-18 mths ago, real returns, real assets

if you can't afford then rent, simple,

this will go on for you're lifetime

thankyou

robots

 

[numbercruncher]

Hello


If You bought realestate 12mnths ago it might of went up 20pc , atleast 50pc of that profit eaten by stamp duty/Interest and the Realestate sharks "fee" , should you sell.

Smart money went long gold 12 months ago, up 30pc, zero hold fee, real asset.

If your not Intellectually developed enough to play the game stick to realestate.

This will go on for your lifetime and that of your offspring.

Thankyou

NC

 

[robots]

hello,

you wouldnt even have 10 Oz on it NC,

thankyou

robots

 

[numbercruncher]

Hello

What I have isnt relevant to the discussion, but if we wanted to turn it personal Id be surprised if you even had 1.5 inches.

Thankyou

NC

 

[robots]

hello,

did you lay on a few dollars 12mths ago, another no-brainer like you're margin loan on BHP?

thankyou

robots

 

[theasxgorilla]

I dont even buy the demand outstripping supply argument, just check out available rentals on realestate.com.au, squillions of places for rent, only shortage is in certain suburbs , but the realestate lobbyists use that as a blanket argument of shortages everywhere which is just false/misleading.

I take it you've been out putting your feet to the pavement and looking around, not cooped up in a basement with windows covered over with black paint?

This is not exactly revealing anything remarkable either. If there is no rental demand in an area then is it any surprise that prices are perhaps, stagnating, and you find fodder for your arguement? As Prof Frink has pointed out, its not impossible to find places where prices have stagnated these last 2-3 years. Areas that have experienced price growth on the other hand are now also experiencing rental shortages. Read into it what you will, but 30-60 people turning up to rental open-for-inspections in Melbourne's outer-east says a handful of things to me.

1. People are cashing in their gains...ie. they feel uncertain about the future, or they're certain prices will go down, or they're just certain they want their money....who knows, who cares, they don't know jack like the rest of us. All that is important is the actual behaviour.

2. Massive number of renters squabbling for 'sub-prime rentals' (I made up that phrase, you like it? It means property you wouldn't see fit to put your dog into but landlords can get away with offering it and potential tenants have to consider (at ever increasing prices) because it's all that is available...either that or go back and live with Mum and Dad <gulp>. OR buy again and find oneself staring down a possible 'new net worth' equation that looks like the following:

"New net worth" = "Before I cashed my gains net worth" - "stupidly ridiculous amount of stamp duty" - "moving costs" - "amount that I fear my house price will fall in price after I buy it" - "incidental costs to fix stuff that I didn't find out about before I bought".

What I see happening, which has already been happening the last couple of years, is rents will continue to go up. And in decent areas (you know the places where people can get a job and actually want to live??) where prices went up these last 2-3 years people would rather hold their properties than sell because who wants to slug it out weekend after weekend with the crowds or face the prospect of the above 'new net worth' equation? Price decreases or stagnation on low volume is not the same as a crash or a panic. Nor do token properties sold for very low prices that the mainstream media discover. Study consolidation or reversal patterns on share charts to see how this might appear visually. It's actually a positive thing for patient investors. The more that TIME overshoots PRICE during such a consolidation the stronger the eventual breakout. The less time price spends at extreme low levels the stronger that indication that those prices levels are not willingly being supported by the market. Keyword: "willingly". When people have no choice then that is something else. I dare say we're know what it looks like when we actually see this en masse, but we haven't seen it yet in this boom cycle.

Many of us have been getting paid more and more these last few years so we can afford the rent increases (did anyone NOT realise that renting in Australia is incredibly cheap!?!?). And watch what happens with unions and Labor now. Rents up, wages up.

Rents up = higher yields = investors re-enter the market eventually, notice I said, eventually. Hell, their PPOR house prices aren't dropping yet, they can use that as collateral and leverage in, eventually.

IF the US and the rest of the world really cr@ps out badly, which it may well, I think Australia will stand to recover faster than many other countries providing nothing happens to derail China in any terminal way. The 'decoupling' theory ie. China and Europe can make up for a sickly US consumer, may not play out as such but I don't think it needs to. If China just keeps chugging along, or even consolidates a little, then we're only really waiting for a US and European recovery...how long should that be?

Bottom line, now is still not a time to bet against property in Aust in the medium to long term. Short term, I'll pick my time and place to re-enter the Aust market...that could be over 12 months away though. But what's the hurry???

 

[wayneL]

Meanwhile, in the UK:

 

[theasxgorilla]

Meanwhile, in the UK:

Please do tell about the areas worst affected!

 

[wayneL]

Please do tell about the areas worst affected!

Most likely, not where I want to buy.

But I still think this will take 2-5 years to play out, so, 1/ this program is way too early and 2/ No hurry.

I'll tell you about worst affected ares then. (with timely updates of course )